The Euro has broken through US$1.08 after German Manufacturing PMI crashed and as investors look ahead to US Jobless claims.
At 08:15 UTC, EUR/USD is trading -0.3% at US$1.0792. This is at the bottom end of the daily range of US$1.0785 – US$1.0835 and the fourth straight session that the Euro has declined versus the US Dollar.
German Composite PMI at 17.1
A record drop-in German manufacturing activity in April has sent the Euro tumbling on Thursday. IHS Markit data showed that Germany’s private sector’s recession deepened, and manufacturing experienced a record fall in output owing to the coronavirus crisis.
The flash composite PMI, which tracks both manufacturing and service output and accounts for over two-thirds of the economy tanked to 17.1 in April, down from 35 the previous month and significantly worse than the 31 forecast. This is the lowest reading on record. To put it into context in the financial crisis the composite reading dropped to 36.3. This illustrates the extent of the damage that the coronavirus crisis is having on the economy.
Investors will now look ahead to the release of the Eurozone PMI data which analysts expect to be dire. The composite reading is expected to decline to 25.9 in April down from 29.7 in March.
4.5 Million Initial Jobless Claims
The US Dollar is pushing higher, despite slipping lower in early trade the US Dollar is advancing again as investors look ahead to the release of US jobless claims. In the 4 weeks ending 10th April the number of Americans filing for unemployment benefit jumped to 21 million, which is approximately 13% of the US workforce. Today, analysts are expecting the number of initial claims to increase by 4.5 million, taking the total to close to 25 million. A higher number could boost demand for the safe haven US Dollar, pushing the greenback higher.
Also, today, the House of Representatives are expected to give the all clear to the latest $484 billion rescue package. The package aims to provide relief to smalls firms, allowing them to pay employees during the lock down period. This should mean that going forwards and combined with states reopening, the number of initial jobless claims should fall.
