US Dollar (USD) Exchange Rates Weaken following US Manufacturing Data
US Dollar exchange rates extended losses during today’s North American session following less-than-ideal domestic data. The US Manufacturing PMI was forecast to rise from 51.5 to 52, but the actual result dropped to just 50.8. That is dangerously close to the 50 mark that separates growth from contraction.
- Euro exchange rates struggle after German and Eurozone data disappoints
- UK Pound exchange rates continue to strengthen as EU referendum jitters ease
- US Dollar dconversion rates tick higher ahead of manufacturing data
- Euro forecast to hold losses against Pound and US Dollar after slower-than-expected Eurozone sectoral growth
Euro (EUR) Exchange Rates Cool as Data Suggests Eurozone Slow Down, Pound Sterling (GBP) Gains
The Euro to Pound Sterling (EUR/GBP) exchange rate declined by around -0.7% on Friday afternoon.
On a comparatively quiet day for economic data, Eurozone ecostats featured prominently. Having produced mostly disappointing results, however, the Euro declined versus the majority of its most traded currency peers.
Whilst the preliminary result for Germany’s Manufacturing PMI bettered expectations in April, German Services and Composite PMIs both unexpectedly slowed in the same period.
In addition, the preliminary figures for April’s Eurozone Manufacturing, Services and Composite PMIs all failed to meet with the respective median market forecasts.
Commenting on the Eurozone flash PMI data, Chris Williamson, Chief Economist at Markit said:
‘The Eurozone economy remains stuck in a slow growth rut in April, with the PMI once again signalling GDP growth of just 0.3% at the start of the second quarter, broadly in line with the meagre pace of expansion seen now for a full year. A failure of business expectations to revive following the ECB’s announcement of more aggressive stimulus in March is a major disappointment and suggests that the modest pace of growth is unlikely to accelerate in coming months.’
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7830.
Over the Channel, the British asset continued to add to recent appreciation despite a slew of disappointing ecostats in recent weeks. Even Thursday’s particularly disappointing retail sales and government spending data publications weren’t enough to offset Sterling gains.
The British Pound’s uptrend was mostly the result of easing ‘Brexit’ jitters. Recent opinion polls suggested that the votes have swung in favour of the ‘Remain’ campaign.
This caused consolidation trade amid concerns that the depreciation following the announcement of the referendum forecast was very much overdone. Sterling’s relief rally may potentially continue after the weekend, but any political developments may provoke GBP exchange rate volatility.
Also supportive of demand for the UK Pound was the recent rally in commodity prices and European stock values. This saw heightened appetite for riskier assets.
US Dollar (USD) Exchange Rates Struggle against Fed Rate Hike Uncertainty
The Euro to US Dollar (EUR/USD) exchange rate declined by around -0.3% on Friday afternoon.
The US Dollar held steady versus most of its peers on Friday having declined heavily in recent weeks. A slight err towards appreciation, however, can be linked to consolidative trading amid concerns that the USD’s downtrend was overdone.
This does not mask the fact that US data has printed poorly recently, however. Thursday’s Philadelphia Federal Reserve Manufacturing Activity report showed an unexpected contraction of -1.6%.
One of the major factors weighing on demand for the ‘Greenback’ recently has been increased bets of Fed rate hike delays following a number of dovish speeches from central bank officials.
Whilst Fed Chairwoman Janet Yellen’s assertion that rate hikes will be subject to global economic improvement reduced the impact of domestic data, the lack of progress in the global economy could see the North American central bank hold rates for a considerable time to come.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1258.
EUR, GBP and USD Exchange Rates Forecast: US Manufacturing Data to Provoke Volatility?
The sole US economic data publication today, April’s US Manufacturing PMI, may cause EUR/USD exchange rate volatility. However, US data has been having a reduced impact on the US Dollar in recent times.
The British asset is likely to continue to hold gains versus the Euro and the US Dollar thanks to a complete absence of domestic data to provoke changes. With that said, any political developments regarding the EU referendum could offset current momentum.
Market sentiment may also play a part in the EUR/USD and EUR/GBP exchange rates today. If crude oil prices continue to fall and commodities follow suit, dampened demand for riskier assets could see the US Dollar climb versus both the Pound and Euro.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.1248 to 1.1309.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7822 to 0.7884 during Friday’s European session.