- Euro (EUR) trades lower as covid 2nd wave continues to surge
- Manufacturing PMIs in focus
- US Dollar (USD) rises on safe haven inflows as election jitters take over
- US manufacturing PMI, FOMC, non-farm payrolls make for a busy week
The Euro US Dollar (EUR/USD) exchange rate is extending losses for a sixth consecutive day on Monday. The pair lost 1.8% last week closing on Friday at US$1.1647 at the low of the week. At 07:15 UTC, EUR/USD trades -0.2% at US$1.1625 a level which was last seen a month ago.
The Euro lost ground across the previous week and is extending those losses today as covid cases continue to surge across Europe. Last week France and Germany, the Eurozone’s largest economies almost in parallel announced month-long national lockdowns. Other countries in the bloc could follow suit sooner rather than later the second wave of covid spreads out of control.
Manufacturing PMIs are offering some support to the common currency. Both France and Italy have reported better than forecast activity in the manufacturing sector, beating earlier flash estimates. France recorded manufacturing PMI of 51.3, up from an initial forecast of 51. Italy’s IHS/Markit manufacturing PMI rose to 53.8, up from the flash reding of 53.2, whereby the level 50 separates expansion from contraction.
The manufacturing sector has proved to be much more resilient to the impact of the pandemic than the service sector. This of course is now likely to change as lockdown restrictions are imposed once again. The Eurozone manufacturing PMI is awaited.
The US Dollar is pushing higher across the board as investors look towards the greenback for its safe haven properties. Not only are concerns over surging covid cases unnerving investors but political jitters are also showing through ahead of tomorrows’ US Presidential election.
Democratic candidate Jo Biden has maintained a healthy lead over President Trump in the national polls. However, the race appears to be getting tighter in key swing states. There is risk of a contested election results could boost safe haven flows.
This week is a busy week for data, with US PMIs, a ed rate decision and non farm payrolls.