- Euro (EUR) has been well supported since EU recovery fund agreed
- PMI data for the bloc is expected to show a return to growth for the service sector and the manufacturing sector
- US Dollar (USD) remains out of favour amid signs that labour market’s recovery is stalling
- US PMI’s in focus, expected to show activity in the US service and manufacturing sector expanding.
The Euro US Dollar (EUR/USD) exchange rate is extending gains amid a phenomenal rally. The pair settled on Thursday +0.22% at US$1.1596 slightly down from the fresh 21 month high of US$1.1627 reached earlier in the session. At 07:15 UTC, EUR/USD trades +0.16% higher at US$1.1612.
The Euro has been on a charge this week, soaring +1.5%. This common currency has received a boost in popularity following an agreement by the EU leaders on a large stimulus package for the region. The agreement sent out a strong message, whilst the stimulus will go some way to cushioning the blow from the coronavirus crisis.
Eurozone data has broadly been encouraging. German consumer confidence unexpectedly soared, showing that Germans are ready to spend as August approaches. PMI data due shortly is also expected to show that the service sector and the manufacturing sector returned to growth in July.
Meanwhile the US Dollar continues to languish at low levels. Investors are shunning the greenback as the US struggles to contain the spread of the coronavirus and as stimulus is still some way off.
Yesterday data revealed that the US labour market’s recovery was stalling. The number of American who signed up for unemployment benefits increased on the week to 1.4 million, up from 1.3 million. This was the first weekly increase since March and comes as parts of California and the sunbelt head back into lockdown to control surging covid cases.
Looking ahead investors will focus on US PMI data for both the service sector and the manufacturing sector. Both readings are expected to show an increase in activity, and a move into expansionary territory.
