- Euro (EUR) rebounds in risk on trading
- Spanish manufacturing activity returns to expansion & beats forecasts
- US Dollar (USD) eases after US fiscal stimulus deals nears
- Upbeat US private sector jobs report shows 749,000 private sector were jobs added
The Euro US Dollar (EUR/USD) exchange rate is rebounding on Thursday, paring losses from the previous session. The pair settled -0.4% lower on Wednesday at US$1.1718. At 07:15 UTC, EUR/USD trades +0.2% higher at US$1.1743.
An upbeat mood in the market is boosting the Euro after declines in the previous session on inflation concerns. The Euro fell on Wednesday after European Central Bank President Christine Lagarde highlighted anxieties over low inflation in the region. Inflation in August moved into negative territory. This month, inflation which is due to be released on Friday, is also expected to show disinflation continues and at a worsening rate.
Attention today will be on the manufacturing PMI figures from across Europe. Data from Spain has revealed that factory activity expanded slightly in September, rising to 50.8, up from 49.9 in August. The level 50 separates expansion from contraction. The Spanish manufacturing PMI had plunged to 30 in April during the lockdown period. Whilst September’s reading shows that the sector is expanding, this is still very fragile growth.
Investors will now look to readings from Germany which is expected to hit 56.6 and the Eurozone at 53.3. Strong readings could lift the Euro.
The US Dollar is trending lower across the board following solid US data in the previous session and amid growing optimism surrounding a US fiscal stimulus package.
US Treasury Secretary Steven Mnuchin said that talks with House Speaker Nancy Pelosi had made a lot of progress. He has offered a $1.6 trillion package, slightly below the $2.2 trillion Democrat package. Hopes that Congress will agree a deal and prop up the US economy is lifting demand for riskier assets whilst weighing on demand for safe havens such as the greenback.
Upbeat US is also boosting the mood in the market. US ADP payroll figures smashed expectations adding 749K new jobs in September. This bodes well for Friday’s closely watched non-farm payroll report.
