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Euro US Dollar (EUR/USD) Exchange Rate Steadies as US Composite PMIs Improve

July 3, 2019 - Written by John Cameron

EUR/USD Exchange Rate Flat as US Manufacturing Eases

The Euro US Dollar (EUR/USD) exchange rate steadied today and is currently trading around $1.129 on the interbank market.

The US Dollar (USD) stabilised against the Euro (EUR) following the publication of the US Markit PMI Composite figures for June, which rose from 50.9 to 51.5.

Chris Williamson, a Chief Business Economist at IHS Markit, was downbeat, however, saying:

‘An improvement in service sector growth provides little cause for cheer, as the survey data still indicate a sharp slowing in the pace of economic growth in the second quarter… Trade wars and geopolitical concerns topped the list of companies’ worries about the year ahead, alongside forecasts of slower economic growth.’

Today also saw the ISM non-manufacturing PMI figures for June which eased below forecast to 55.1, against the previous month’s 56.9.

The Euro, meanwhile, steadied against the ‘Greenback’ following the publication of the Eurozone’s PMI composite figures for June, which improved on forecasts and rose to 52.2.

These, however, failed to provide uplift for the European currency, with fears setting in that the European Central Bank may have to renew stimulus as the Eurozone’s economy continues to show signs of flagging.

USD/EUR Exchange Rate Rangebound as US-China Trade Talk Doubts Increase

The US Dollar is being increasingly beleaguered by concerns over US-China trade talks, with doubts now rising over the so-called ‘trade truce’ following the G20 summit last weekend.

Ethan Harris, the Head of Global Economics at the Bank of America Merrill Lynch, commented:

‘We should be thinking of this as a calm in the middle of the storm here. Actually, the trade war is far from over, even with the ceasefire. There’s a lot of things to talk about going forward.’

Returning uncertainty surrounding global trade is beginning to weigh on the ‘Greenback’, as the two superpowers once again show signs of rising trade tensions.

Today’s publication of the US factory orders figures for May, which fell below consensus from -1.2% to -0.7% has reflected the economic damage of continued tensions between the US and China.

This follow’s June’s three-year low which was a result of manufacturers expressing concern over heightened global trade volatility.

USD/EUR Outlook: US-China Trade Talks in Focus

Euro traders will be looking ahead to tomorrow’s Eurozone retail sales figures for May.

As they are expected to increase, we could begin to see the European currency edge higher against the US Dollar.

Tomorrow is a bank holiday in the US, with markets closed for Independence Day.

The Euro US Dollar (EUR/USD) exchange rate could rise if, however, there are any signs of a trade deal emerging between the US and China.

As the Euro is negatively correlated with the US Dollar, a deal between the two superpowers would see traders flee the safe-haven of the ‘Greenback’ for riskier assets.

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