- Euro (EUR) moves lower as cautious trade dominates
- EZ manufacturing PMI 54.8 beats forecasts
- US Dollar (USD) rises as short squeeze concerns linger
- Silver the latest focus for retail traders versus hedge funds
The Euro US Dollar (EUR/USD) exchange rate is trending southwards at the start of the new week, extending losses from the previous week. The pair shed -0.25% across last week and settled at US$1.2136. At 09:15 UTC, EUR/USD trades -0.34% at US$1.2092.
The Euro is trading on the backfoot despite encouraging manufacturing PMI data particularly from Germany the largest economy in the Eurozone, but also across the bloc as a whole. Data revealed that the upturn in the German manufacturing sector continued in January. The manufacturing PMI was 57.1, down from December’s 3 year high of 58.3 but still a very solid reading.
In the Eurozone the manufacturing PMI also beat forecasts at 54.8 for the final January print, down slightly from December’s 55.2 but still firmly in expansion territory. The level 50 separates expansion from contraction.
Despite data holding up well, demand for the Euro is weak as its covid vaccine programme has been very slow to get off the ground compared to other nations and regions. Not only was approval of vaccines later but there have also been production issues, so supply has been a limiting factor.
Attention will now turn to Eurozone unemployment data which is expected to remain steady in December at 8.3%.
The US Dollar is staring the week higher amid a cautious note to trading following last week’s turmoil in the equities market.
Last week retail traders took on the hedge funds of Wall Street forcing them to liquidate positions to cover short positions in stocks such as GameStop, AMC Entertainment and Blackberry to name a few.
Caution remains in the FX market as retail traders turn their attention to silver for the next short squeeze. Silver trades +10% in early trade.
Concerns over Joe Biden’s ability to push his $1.9 trillion stimulus programme through Congress is adding to the risk off tone in the FX markets.