- Spanish service sector PMI rebounds strongly to 27.9 vs 7.1 in April
- Euro (EUR) supported as Eurozone PMI expected to follow suit
- Safe haven US Dollar (USD) slips despite US riots & 9 million fall on private payrolls expected.
- At 08:15 UTC, EUR/USD is trading +0.5% at US$1.1223
The Euro is extending gains for a seventh straight session, pushing through US$1.12, its highest level since March. The Euro US Dollar exchange rate has rallied just shy of 3% since last Tuesday.
At 08:15 UTC, EUR/USD is trading +0.5% at US$1.1223. This is at the top end of the daily traded range on reopening optimism, encouraging service sector PMI data and despite continued civil unrest in the US.
The easing of lockdown measures and optimism surrounding the reopening of economies is maintain the risk on climate in the market, lifting riskier assets and currencies whilst weighing on the safe haven US Dollar.
Service sector PMI data will be in focus, with Spain releasing its figures first. The PMI revealed that Spanish business activity is improving relative to April, jumping to a better than forecast 27.9 in May. This is a strong rebound from April’s 7.1 reading. Investors are opting to concentrate on the positives, rather than the fact that the sector remains deep in contraction.
The broader Eurozone reading is expected to show a similar trend, improving to 28.7 in May.
Unemployment data will also flood the market. German aNd Eurozone unemployment figures are expected to creep higher as the impact of the coronavirus lockdown seeps into the labour market. However, the figures are not expected to be anywhere near as bad as the unemployment figures coming out of the US. This is thanks to government schemes which are paying to keep people employed even if there is no work for them.
The US Dollar remains on the back foot, slipping lower as risk appetite increases; investors continue to shrug off protests in US.
Stocks on Wall Street closed at 3-month highs demonstrating how bullish investors are – a disconnect from the terrible economic data that continues to highlight the damage that coronavirus has caused to the US economy.
Attention will now turn to US ADP private payroll data. This is considered a good lead indicator for Friday’s non-farm payroll. Analysts are expecting a 9 million fall in private payrolls in May. A shocking number, but still a vast improvement on April’s 25 million.
