- Euro (EUR) supported by cautiously upbeat market mood
- EZ manufacturing & services PMI up next
- US Dollar (USD) declined on rising jobless claims
- US manufacturing & services PMI in focus
The Euro US Dollar (EUR/USD) exchange rate is extending gains for a second straight day. The pair settled +0.4% higher on Thursday at US$1.2088 at the high of the day. At 09:15 UTC, EUR/USD trades +0.2% at US$1.2120. The pair is on track to make neither gains nor losses across the week, after gaining 0.6% in the previous week.
A mildly upbeat mood in the market is supporting the Euro on Friday. Equity indices in Europe are rising in early trade and US futures are also recovering.
The minutes from the European Central Bank’s latest monetary policy meeting indicated that the ECB intend to stick with stimulus measures, despite a recent rise in inflation. The central bank committed to looking through spikes in inflation, believing that sustained price growth will only happen very slowly. Overall the minutes supported the view that the ECB are not looking to move on policy this year.
Today manufacturing and service sector PMI data for February will be in fovus. These are the preliminary readings and therefore have more potential to move the markets than the final readings.
So far through the pandemic the manufacturing sector has remained very resilient whist the service sector has been the hardest hit by lockdown and social distancing restrictions. Today’s PMI data is expected to reflect that trend with manufacturing remaining in expansion territory whilst the service sector continues to contract.
The US Dollar came under pressure in the previous session following disappointing US jobless claims. The number of American’s signing up for unemployment benefits unexpectedly jumped to 861,000, up from 793,000 last week and significantly higher than the 765,000 than analysts had penciled in.
Today attention will be on the manufacturing and service sector PMIs which are expected to show the US economy in good health with strong expansion in both the service and manufacturing sector at 58.5 and 57.6 respectively. The number 50 separates expansion from contraction.