GBP/EUR: Euro Slips vs Pound As Trade Wars Hit Germany

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.

 


Currencylive.com is a news site only and not a currency trading platform.
Currencylive.com is a site operated by TransferWise Inc. ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.