GBP/USD: UK and US Manufacturing in Focus As Investors Brace For A Busy Week

The euro US dollar exchange rate experience a volatile session on Wednesday. The euro rallied to a high of US$1.1114, its highest level in a month. However, it was unable to maintain the gains, slipping back to the flat line to close. The pair closed at US$1.1083 the same level that it had started the session at. The euro is edging cautiously higher on Thursday, although remains below the key US$1.11 mark.

The euro struggled to hold onto dollar inspired gains in the previous session, thanks in part to eurozone pmi data which, in some areas fell short of analyst’s expectations. Whilst the German service sector pmi beat forecasts the French figure disappointed investors. Today German factory orders also came in weaker than forecast.

Recent eurozone data has been broadly encouraging, offering evidence that the slowdown in the eurozone economy could be stabilising. However, yesterday’s service sector numbers and today’s factory orders are reminding investors that there is still lingering weakness in the bloc’s economy.

Macro-economic data for the region will remain in focus today as euro investors look towards a slew of eurozone data due to be released. These include high impacting data such as the eurozone GDP, retail sales and unemployment. Should the data point to the continued stabilising of the eurozone economy, the euro could receive a boost.

Will US Data Continue To Disappoint?

The dollar weekend sharply in the previous session, on weak macroeconomic stats before recovering on improved optimism of a trade deal between the US and China.

Both US ADP private payroll numbers and ISM non-manufacturing figures missed expectations on Wednesday. The soft readings come following disappointing manufacturing data earlier in the week. A trio of poor readings unnerved US dollar investors, raising concerns that the ongoing US — China trade dispute could be having a more severe impact on the US economy than originally thought. This caused the dollar to weaken.

Trade remains a key theme. Reports that the US and China are moving closer to a phase one trade deal and were discussing the rolling back of some tariffs, boosted hope that a deal could still be salvaged.

Today attention will remain on trade. Investors will also look towards a string of high impacting data releases including factory orders, trade balance and jobless claims ahead of Friday’s non-farm payroll.

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 EUR = 1.12829 USD

Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.

Or, if you were looking at it the other way around:

1 USD = 0.88789 EUR

In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar.

 


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