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Euro to US Dollar Exchange Rate Slips from Highs as Eurozone PMIs Fall Short
Published: 24 Jul at 3 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Swiss Franc Exchange Rate, Euro Crisis, UK, Exchange Rates, Economy, Inflation, France,
A combination of the latest ecostats and stronger demand for the US Dollar following its poor performance at the end of last week has caused the Euro to US Dollar (EUR/USD) exchange rate to slip. However, EUR/USD movement is likely to remain muted until major Eurozone and US news later in the week.
Last week was a highly volatile week for EUR/USD, as the pair opened the week at the level of 1.1686 and briefly slumped to a July low of 1.1584 before surging again. EUR/USD closed the week at the level of 1.1730. Since markets opened on Monday, EUR/USD has been sliding again and trended close to the level of 1.1700 at the time of writing.
While the Euro climbed versus the US Dollar towards the end of last week, this was more due to US Dollar weakness than any sustained demand for the Euro.
Last week’s core Eurozone Consumer Price Index (CPI) inflation results fell short of expectations and weighed on already cautious European Central Bank (ECB) interest rate hike bets, limiting EUR/USD’s late week climb.
The trend of underwhelming Eurozone data continued on Tuesday, as Markit’s Eurozone PMI projections from for July disappointed in some key prints too.
Germany’s July PMI projections actually beat forecasts in every notable print. Manufacturing unexpectedly surged from 55.9 to 57.3 and services edged lower from 54.5 to 54.4 rather than the expected 54.3.
However, due to weakness in the services sector in France and other Eurozone nations, the Eurozone’s overall services PMI slumped from 55.2 to 54.4 rather than the predicted 55.
The Eurozone’s composite PMI for July slowed from 54.9 to 54.3, missing the forecast 54.8.
The data indicated that the rebound seen in June was just a temporary boost, rather than the beginning of a sustained rise in economic activity. As a result, the Eurozone economic outlook dimmed slightly and the Euro weakened.
This made it easier for the US Dollar to advance, though the US currency’s strength was still limited by uncertainties about the US economy as US President Donald Trump ramps up protectionist rhetoric.
EUR/USD briefly hit its lowest level in a month last week, by the US Dollar was sold due to Trump’s criticism over US Dollar strength and the Federal Reserve’s rising US interest rates.
His comments worsened concerns that the Fed could be influenced by the US President, despite its independence from US government. This, as well as concerns that a currency war was possible, left the US Dollar unappealing last week.
However, since then economists and Federal Reserve officials have indicated that the Fed is highly unlikely to be influenced by the US President’s rhetoric, and that more US interest rates are still likely before the end of the year.
Markets are still betting for a total of four US interest rate hikes in 2018, due to the resilient strength of the US economy.
The US data published this week so far has had little impact on the US Dollar outlook, but some underwhelming US services PMI data from Markit on Tuesday did limit the currency’s appeal and help the Euro to avoid further losses.
Key Eurozone and US news is likely to continue to drive the Euro to US Dollar (EUR/USD) exchange rate this week, with influential developments expected from Wednesday through Friday.
Wednesday will see the publication of Germany’s July business confidence data from Ifo, as well as US new home sales stats for June.
However, Thursday’s session is likely to be much more influential as the European Central Bank (ECB) will hold its July monetary policy decision.
The bank is not expected to make any changes to policy, but any shifts in tone regarding issues like the Eurozone economic outlook or US trade protectionism could be highly influential for Euro movement.
US durable goods orders data will be published too, but US Dollar investors are more likely to await Friday’s session when key US Gross Domestic Product (GDP) growth projections for Q2 will be published and could have a strong influence on the US outlook.
Last week was a highly volatile week for EUR/USD, as the pair opened the week at the level of 1.1686 and briefly slumped to a July low of 1.1584 before surging again. EUR/USD closed the week at the level of 1.1730. Since markets opened on Monday, EUR/USD has been sliding again and trended close to the level of 1.1700 at the time of writing.
While the Euro climbed versus the US Dollar towards the end of last week, this was more due to US Dollar weakness than any sustained demand for the Euro.
Last week’s core Eurozone Consumer Price Index (CPI) inflation results fell short of expectations and weighed on already cautious European Central Bank (ECB) interest rate hike bets, limiting EUR/USD’s late week climb.
The trend of underwhelming Eurozone data continued on Tuesday, as Markit’s Eurozone PMI projections from for July disappointed in some key prints too.
Germany’s July PMI projections actually beat forecasts in every notable print. Manufacturing unexpectedly surged from 55.9 to 57.3 and services edged lower from 54.5 to 54.4 rather than the expected 54.3.
However, due to weakness in the services sector in France and other Eurozone nations, the Eurozone’s overall services PMI slumped from 55.2 to 54.4 rather than the predicted 55.
The Eurozone’s composite PMI for July slowed from 54.9 to 54.3, missing the forecast 54.8.
The data indicated that the rebound seen in June was just a temporary boost, rather than the beginning of a sustained rise in economic activity. As a result, the Eurozone economic outlook dimmed slightly and the Euro weakened.
This made it easier for the US Dollar to advance, though the US currency’s strength was still limited by uncertainties about the US economy as US President Donald Trump ramps up protectionist rhetoric.
EUR/USD briefly hit its lowest level in a month last week, by the US Dollar was sold due to Trump’s criticism over US Dollar strength and the Federal Reserve’s rising US interest rates.
His comments worsened concerns that the Fed could be influenced by the US President, despite its independence from US government. This, as well as concerns that a currency war was possible, left the US Dollar unappealing last week.
However, since then economists and Federal Reserve officials have indicated that the Fed is highly unlikely to be influenced by the US President’s rhetoric, and that more US interest rates are still likely before the end of the year.
Markets are still betting for a total of four US interest rate hikes in 2018, due to the resilient strength of the US economy.
The US data published this week so far has had little impact on the US Dollar outlook, but some underwhelming US services PMI data from Markit on Tuesday did limit the currency’s appeal and help the Euro to avoid further losses.
Key Eurozone and US news is likely to continue to drive the Euro to US Dollar (EUR/USD) exchange rate this week, with influential developments expected from Wednesday through Friday.
Wednesday will see the publication of Germany’s July business confidence data from Ifo, as well as US new home sales stats for June.
However, Thursday’s session is likely to be much more influential as the European Central Bank (ECB) will hold its July monetary policy decision.
The bank is not expected to make any changes to policy, but any shifts in tone regarding issues like the Eurozone economic outlook or US trade protectionism could be highly influential for Euro movement.
US durable goods orders data will be published too, but US Dollar investors are more likely to await Friday’s session when key US Gross Domestic Product (GDP) growth projections for Q2 will be published and could have a strong influence on the US outlook.
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Source: moneytransfer.co.uk