Euro US Dollar (EUR/USD) Exchange Rate Slumps as German PMI Slumps to 7-Year Low
The Euro US Dollar (EUR/USD) exchange rate slumped and the pairing is currently trading at around $1.0977.
The single currency fell as the flash German PMI composite plummeted to its lowest since October 2012.
The flash figure, which is based on around 85% of usual monthly replies, slumped from 51.7 in August to 49.1 in September.
This is the first time the PMI has plummeted below the 50 no change mark since April 2013, causing the Euro to slide.
Commenting on this, Principal Economist at IHS Markit, Phil Smith noted:
‘Another month, another set of gloomy PMI figures for Germany, this time showing the headline Composite Output Index at its lowest since October 2012 and firmly in contraction territory.
‘The economy is limping towards the final quarter of the year and, on its current trajectory, might not see any growth before the end of 2019.
‘With job creation across Germany stalling, the domestic-orientated service sector has lost one of its main pillars of growth. A first fall in services new business for over four-and-a-half years provides evidence that demand across Germany is already starting to deteriorate.’
US Dollar (USD) Edges Up on ‘Productive’ US-China Trade Talks
The US Dollar rose against the Euro after reports revealed the reason China cancelled its trip to American farm states was not due to failure in trade talks.
Vice-Minister at the Ministry of Agriculture and Rural Affairs, Han Jun stated:
‘The change in the plan had nothing to do with the trade negotiations, as the trip was a stand-alone arrangement.
‘We indeed had discussed with the US side about relevant arrangements, but the schedule was never finalized, due to various consideration, for now, we haven’t scheduled trip to US farming states.’
Meanwhile, October’s face-to-face US-China trade talks are still on track despite President Donald Trump’s comments on Friday suggesting a breakthrough was unlikely.
Trump notes that he was ‘not looking’ for a partial deal.
However, both sides published positive statements, with the US calling talks ‘productive’ and Beijing noting discussions were ‘constructive’.
Euro US Dollar Outlook: Will a Dovish Draghi Send EUR Lower?
Looking ahead to this afternoon, the US Dollar (USD) could edge down against the Euro (EUR) following the release of the US flash PMI composite.
If the preliminary data reveals growth in both the services and manufacturing sectors has slowed, the ‘Greenback’ could be left muted against EUR.
Meanwhile, the European Central Bank’s (ECB) President Mario Draghi will give a speech on Monday afternoon.
If Draghi’s tone is overly dovish, the Euro could be left dampened, and the Euro US Dollar (EUR/USD) exchange rate could slide further.