Dollar Down Risk Pop; Euro Up on PMI
JUNE 23, 2020
The U.S. Dollar stayed put overnight as trading sessions returned in most of Asia and the European continent.
A little bit of self-correction seemed to poise currencies like the Euro and Pound to make a comeback, but that push towards recovery against the greenback proved to be temporary. Underwhelming Gross Domestic Product in the Eurozone and Manufacturing Purchasing Managers Index data in Britain sank the shared major currencies.
We might see very tight markets ahead of the Fed’s announcement later today at 2PM, which will not feature a press conference, but analysts will immediately turn the focus on what will be on the committee’s assessment of inflation. If satisfied, chances of future hikes soon will increase and perhaps push the dollar beyond this year’s best levels. ADP Employment solidified the image of a strong American economy with 204K payrolls added over an estimated 198K for April.
What to Watch Today…
- Senior Currency Strategist Juan Perez will be Le Fonti TV at 9:15 a.m. Stream here https://www.lefonti.tv/
Complete Economic Calendar can be found here.
The Euro was the beneficiary of a weakening dollar but was also able to rally on the back of strong economic data. The Purchasing Managers Index from IHS showed a continued contraction but a vast improvement over previous months. Composite PMI increased to 47.5 in June from 31.9 in May. A reading below 50 shows a contraction. French PMI was the brightest spot which showed an expansion for the first time in four months.
EUR/USD jumped half a percent and is now trading at its highest level since June 16th.
Much like the Euro, the British pound was able to pop higher against the U.S. dollar as PMI data showed incremental improvements. IHS’s Markit’s composite Purchasing Managers Index rose to 47.6 in June from 30 in May. Bloomberg News points out that while the reading is still a contraction, the size of the monthly gain was the biggest since the survey began in 1998.