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Slower US Private Payrolls Growth Leaves Euro US Dollar (EUR/USD) Exchange Rate Flat

Euro US Dollar (EUR/USD) Exchange Rate Left Muted as US Private Payrolls Data Underwhelms

The Euro US Dollar (EUR/USD) exchange rate was left muted and the pairing is currently trading at around $1.0945.

The Dollar was left under pressure as data revealed that private payrolls growth slowed in September.

ADP showed that private employers did not hire as many people as expected, suggesting a slowdown in the labour market.

135,000 jobs were added to the economy in September, while August’s data was downwardly revised to 157,000 from 195,000 positions.

This data comes ahead of Friday’s more comprehensive non-farm payrolls report which includes both public and private sector employment.

Euro (EUR) Flat as Italy Fret Over Prospect of US Trade Tariffs

On Wednesday, the single currency was left under pressure as Italian Foreign Minister Luigi Di Maio expressed that Rome is worried by the prospect of US tariffs on Italian exports.

Speaking at a news conference with US Secretary of State, Mike Pompeo, Di Maio stated:

‘The subject of tariffs worried us a lot because we have companies that survive on exports.’

The Foreign Minister also noted that the government would do all it could to defend interests of exporters.

EUR remained flat as the US market is essential in a time when the Eurozone’s economy is slowing.

US Dollar (USD) Muted as Markets Fear Fed Will Cut Rates Once Again

The US Dollar remained flat on Wednesday as fears the US will suffer a slowdown in its third quarter intensified.

Added to this, fears the US Federal Reserve may call for a further interest rate cut this year left Dollar sentiment dampened.

Data revealed that lingering trade tensions between the US and China caused manufacturing activity to plummet to a decade low.

The US ISM manufacturing PMI was sent further into contraction territory despite expectations the index would claw its way back to growth.

While Markit’s manufacturing PMI revealed output strengthened, bringing the index up to a five-month high, the index remained below trend.

Commenting on the data, Markit’s Chief Business Economist, Chris Williamson noted:

‘News of the PMI hitting a five-month high brings a sigh of relief, but manufacturing is not out of the woods yet.

‘It’s also far from clear that the trend will improve in the fourth quarter. Inflows of new work remain worryingly subdued, to the extent that current production growth is having to be supported by firms increasingly eating into order book backlogs. Business sentiment about the year ahead is also stuck at gloomy levels.

‘The current situation contrasts markedly with earlier in the year, when companies were struggling to keep up with demand.’

Euro (EUR) Left Flat as German Manufacturing Downturn Deepens

While the weak manufacturing data left the ‘Greenback’ muted against the single currency, disappointing PMIs weighed on the Euro.

Commenting on this, CMC Markets analyst, Michael Hewson said:

‘Yes, US manufacturing is disappointing, but it’s no more disappointing than the Eurozone PMIs we saw.’

Manufacturing in the bloc’s largest economy plummeted to the lowest level since June 2009.

Added to this, German new orders plummeted by the greatest extent since April 2009 and the pace of staff shedding accelerated to the fastest rate in over nine years.

Commenting on the weak PMI data, Phil Smith, Principal Economist at ISH Markit said:

‘The manufacturing numbers coming out of Germany continue to disappoint, with September’s PMI widely missing expectations and showing the downturn deepening. The downward trend in new orders – which fell the most in more than ten years – is a particular worry, and continues drive cutbacks in factory output, employment and prices.’

Euro US Dollar Outlook: Will Disappointing US Data Weigh on USD?

Looking ahead to Thursday morning, it is likely the Euro (EUR) will slide against the US Dollar (USD).

If September’s German PMI composite slides further into contraction than expected, the Euro will fall.

Meanwhile, the pairing could be left flat in the afternoon following a slew of potentially disappointing US data releases.

If the US ISM non-manufacturing PMI slides and factory orders contract in August, the Euro US Dollar (EUR/USD) exchange rate is likely to be left muted.