Euro US Dollar (EUR/USD) Exchange Rate Climbs as US Manufacturing Slows

June 3, 2019 - Written by John Cameron

STORY LINK Euro US Dollar (EUR/USD) Exchange Rate Climbs as US Manufacturing Slows

EUR/USD Exchange Rate Edges Higher as US Manufacturing Weakens

The Euro US Dollar (EUR/USD) edged higher today and is currently trading around $1.1205 on the interbank market.

The US Dollar (USD) fell against the Euro (EUR) following disappointing ISM manufacturing PMI figures for May, which eased to 52.1 despite their expected increase at 53.0.

Today also saw weaker-than-expected Markit US manufacturing figures for May, which narrowly avoided contraction at 50.5.

Chris Williamson, the Chief Business Economist at IHS Markit, commented:

‘May saw US manufacturers endure the toughest month in nearly ten years, with the headline PMI down to its lowest since the height of the global financial crisis. New orders are falling at a rate not seen since 2009, causing increasing numbers of firms to cut production and employment.’

The Euro, meanwhile, rose against the ‘Greenback’ following better-than-expected Italian Markit manufacturing PMI figures for May, which improved above consensus, but, however fail to reach out of contraction at 49.7.

EUR/USD Exchange Rate Rises as German Manufacturing Further Contracts

The single currency was particularly dragged down by Germany’s poor performance with the Markit manufacturing PMI figures for May, which slowed down to 44.3, failing to buoy confidence in the Eurozone’s economy.

Phil Smith, the Principal Economist at IHS Markit, commented:

‘Overall, the PMI data continue to paint a negative picture for Germany's manufacturing sector, with the headline Index remaining close to its lowest since 2012… The PMI itself has been pulled downwards by faster falls in employment and input stocks, with the most marked improvement in supplier delivery times for over ten years also having a negative directional influence.’

The Eurozone’s Markit manufacturing figures for May also fell deeper into contraction at 47.7.

Despite this, single currency traders have remained generally stoic, seeing the reasons as due to geopolitical uncertainty as well as the ongoing Brexit crisis in the UK – which shows no signs of being resolved.

The US Dollar’s weakness due to growing pessimism in its economy has provided a boost for the Euro.

EUR/USD Forecast: US Dollar Could Fall on Dovish Fed Statement

Euro traders will be looking ahead to the flash Eurozone’s Consumer Price Index figures for May tomorrow, which are expected to ease.

Tomorrow will also see the Italian unemployment rate figures for April, which are expected to rise.

US Dollar traders, meanwhile, will be focusing on the speech by Jerome Powell, the Chair of the Federal Reserve, and with any dovish comments this could see the USD/EUR exchange rate sink further.

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TAGS: American Dollar Forecasts Euro Forecasts