The Euro is slipping lower versus a broadly stronger US Dollar on Thursday, after four straight sessions of gains. The Euro US Dollar exchange rate settled on Wednesday +0.5% at US$1.0979 after briefly touching a three-week high of US$1.10.
At 08:15 UTC, EUR/USD is trading -0.1% at US$1.0969 as investors digest the latest PMI readings and amid rising US – Sino tensions.
EUR: No Quick Return To Business As Usual
The Euro has been well supported in recent sessions following the announcement of a €500 billion recovery rescue package for the European Union. The fund aims to support those countries and sectors which have been most badly affected by the coronavirus crisis.
Attention is now turning to the release of service sector and manufacturing sector purchasing managers index data. The numbers have been mixed. Activity in the French service and manufacturing sectors beat analysts’ expectations printing at 29.3 and 40.3 respectively in May; a sign that contraction in the sectors was slowing. The figure 50 separates expansion from contraction.
However, Germany’s data was less encouraging with the dominant manufacturing sector PMI printing at 36.8, missing expectations of 39.2.
The data has dashed any hopes of a quick rebound in activity in Germany, Europe’s largest economy. Whilst the rate of decline has eased, the economy remains a long way from business as usual. The euro slipped following the release. Investors will now look ahead to the Eurozone wide PMI figures.
USD: US – Chinese Tensions Rise
The US Dollar is trending northwards across the board as investors seek out its safe haven properties. Rising US – Chinese tensions are hitting risk sentiment. President Trump upped his rhetoric against China overnight, accusing Beijing and more specifically Xi Jinping of spreading disinformation.
Up until now President Trump has always maintained that the two leaders have a strong relationship. However, Trump is now pointing the finger directly at the Chinese Premier Xi Jinping which is unnerving investors and affecting risk appetite.
Attention will now turn towards US initial jobless claims. Analysts are expecting the number of Americans signing up for unemployment benefits to jump an additional 2.4 million in the week ending 15th May. This will be the lowest increase since the coronavirus crisis started 2 months ago. It would take the total to 39 million or 23.9% of the US working population. Recently the US Dollar has shrugged off worse than expected jobless claims.