- Euro (EUR) gains on reopening optimism & stronger Italian & Spanish manufacturing PMIs
- US Dollar (USD) under selling pressure after Trump softens his tone on China
- EZ & US manufacturing PMIs up next
- At 08:15 UTC, EUR/USD is trading +0.4% at US$1.1140
The Euro is charging higher at the start of the week, pushing through €1.11 in its sixth straight session of gains. The Euro US Dollar exchange rallied 1.8% across the previous week settling on Friday at US$1.1099.
At 08:15 UTC, EUR/USD is trading +0.4% at US$1.1140. This is towards the upper end of the daily traded range and a 2.5 month high on broad risk on sentiment and as investors look ahead to the release of Eurozone and US manufacturing purchasing manager’s index data.
Optimism over the reopening of economies across Europe and surrounding last week’s European Commission’s recovery fund has helped underpin the Euro. Previous coronavirus hotspots, such as Spain and Italy, continue to ease lockdown measures reopening important parts of their economies, such as tourism, in time for the key summer months.
Investors will now glance towards the manufacturing PMI data for May, which is expected to come in line with the preliminary reading of 39.5. Early readings by Spain and Italy both beat expectations raising optimism of a V shaped recovery.
The US Dollar is being relentlessly sold off as investors brush off the riots and demonstrations in the US that dominated headlines after the death of George Floyd at the hands of the police and focus on a softening of tone by President Trump towards China.
In his speech on Friday, President Trump removed Hong Kong’s special trade status, as expected. He didn’t withdraw from the US – China trade deal and he didn’t apply sanctions to Chinese officials leading investors to breath a sigh of relief.
Also adding to an optimistic start to trading was Chinese Caixin manufacturing and non-manufacturing PMI data released overnight. Activity in the manufacturing sector has rebounded into expansionary territory at 50.6. Meanwhile the service sector PMI printed at 53.6, indicating that domestic demand was picking up after the coronavirus lock down.
The mood in the market is upbeat on Monday as investors jump into riskier assets. Stocks are bounding higher which the safe haven US Dollar is out of favour.
Attention will now turn to US manufacturing PMI. Analysts are expecting the reading to remain below 40 in May.