Euro to US Dollar Exchange Rate Sees Sturdier Movement Following Eurozone PMI Report
While movement has not been significant this week, the Euro to US Dollar (EUR/USD) exchange rate has avoided further losses as the latest Eurozone data gave markets hope that Eurozone economies could avoid recession.
Following last week’s tumble, EUR/USD movement has been narrower this week. EUR/USD opened the week at the level of 1.1093 and has fluctuated between lows of 1.1072 and highs of 1.1105.
EUR/USD trended just above the week’s opening levels at the time of writing, supported by the morning’s Eurozone PMI stats.
Investors are hesitant to sell the US Dollar too much though, amid anticipation for expected Federal Reserve news from the upcoming Jackson Hole Symposium.
Euro (EUR) Exchange Rates Strengthen as PMIs Slightly Ease Recession Fears
Demand for the Euro (EUR) has been low over the past week. Investors have become more anxious about a potential recession in Germany, as well as the possibility of a more dovish tone from the European Central Bank (ECB).
However, recession fears lightened just slightly this morning, in reaction to sets of stronger than expected PMI data from the Eurozone.
France’s PMIs impressed investors with solid, unexpected improvements. Germany’s manufacturing contraction of 43.6 was highly concerning, but still beat the forecast 43.
According to Markit’s German PMI report:
‘Growth of service sector business activity was again countered by a marked fall in goods production, while overall job creation slipped to a five-year low. Worryingly for the outlook, total new orders sank deeper into contraction territory and firms’ expectations towards future output turned negative for the first time since late 2014.’
The steep contraction in German manufacturing ultimately prevented the Euro from strengthening further, but overall the forecast-beating Eurozone PMIs helped the shared currency to firm.
US Dollar (USD) Exchange Rates Avoid Major Reaction to Fed Minutes amid Jackson Hole Anticipation
Investors have been hesitant to make significant moves on the US Dollar (USD) this week, amid expectations that there will soon be significant developments on the Federal Reserve’s outlooks.
Markets are hotly anticipating the upcoming Global Central Bank Symposium in Jackson Hole, which takes place from today into the weekend.
The event typically sees central bank officials discuss potential upcoming challenges banks will face, and many are speculating that the event could also see a shift in tone from the Federal Reserve.
This anticipation prevented the US Dollar from benefitting much from the Fed’s latest meeting minutes report.
In the Fed’s last policy decision it was more hawkish than expected. The meeting minutes published last night were also more hawkish, with some policymakers reportedly hesitant to cut US interest rates until further data had come in.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Anticipate Federal Reserve Developments
Speculation that the Fed could be pressured by global trade and recession fears to become more dovish on the US economy and monetary policy are keeping investors highly anxious for the Central Bank Symposium at Jackson Hole.
The Symposium begins today and will run through into the weekend. Fed Chairman Jerome Powell is expected to speak at the Symposium tomorrow, and this could be the most influential event for EUR/USD investors this week.
If Powell notably ramps up dovish rhetoric in response to recent global fears, the Euro to US Dollar (EUR/USD) could be in for gains as Fed rate cut bets would rise.
On the other hand though, if Powell continues to avoid becoming too dovish despite these fears, EUR/USD is likely to tumble.
With the Eurozone outlook still showing mixed signs, Euro to US Dollar (EUR/USD) exchange rate investors will also be anticipating potential European Central Bank (ECB) and next week’s Eurozone data.