- Euro (EUR) rebounds on signs of the economic recovery gaining traction after Chinese PMI data and German retail sales beat forecasts
- Barrage of data due, including German unemployment and eurozone manufacturing PMI figures
- US Dollar (USD) trades broadly flat as fears mount over rising coronavirus numbers, PMI data and ADP payroll figures could provide clues over the progress of economic recovery
- Euro US Dollar (EUR/USD) exchange rate picks up off session lows of US$1.1216 to break even at US$1.1232
After mild losses in the previous session the Euro is attempting to move into positive territory as sentiment show signs of improving.
German retail sales soared in May, reflecting a rebound in consumption as Germany eased locked down measures imposed to control the spread of coronavirus. Retail sales rose by 13.9%, after a downwardly revised drop of 6% in April. Analysts had expected an increase of 3.9%.
The data showed a massive increase in online sales as fear of catching coronavirus kept consumers away from stores. The data follows German consumer sentiment figures released earlier in the month, which showed that Germany consumers were feeling more positive regarding their income prospects going forwards.
Investors will now look ahead to Eurozone manufacturing PMI data which is expected to confirm the preliminary reading. Manufacturing activity is expected to remain in contraction in June, but the rate of contraction is expected to have slowed compared to May. An upbeat reading could lift the Euro.
US Dollar is trading broadly flat versus its major peers as optimism surrounding stronger economic data is being offset by concerns over the rising number of coronavirus cases in the US.
On Tuesday, 47,000 new daily covid-19 cases were reported, the highest number since the outbreak started. Investors fear that rolling back reopening measures and re-instating lockdown could knock the fragile economic recovery even before it has really started.
Attention will know turn to a deluge of data to be released later today, including ISM manufacturing and non-manufacturing figures and ADP private payroll numbers. Analysts are expecting 3 million jobs to have been added in June, after 2.7 million lost in May.