The Euro is attempting to push through the 1.0600 mark against the US dollar after tumbling around 70 points in yesterday’s trading session on the back of stronger than expected data from the US kept alive the chances of a possible rate hike from the US Federal Reserve next month.
US PMI data namely the flash Composite PMI hit the market at 51.0, up from last month’s figure of 50.2. The Services PMI rose to 50.9, while Manufacturing PMI rose up to an even 50.0. This is the first time in six months that the manufacturing has come in above 50 which show the sector is in expansion mode.
The PMI figures show that tighter monetary policy and higher interest rates are not deterring investment and industrial activity in the worlds largest economy which continues to thrive even though rates are sitting at their highest levels for more than a decade.
The Eurozone however was a different story and data released yesterday from the block revealed a contraction in PMI and lower inflation in October which support most analysts’ predictions that the European Central Bank (ECB) will leave interest rates on hold when they announce their latest decision on Thursday.
The flash Composite PMI for the eurozone dropped to 46.5 in October from 47.2 in September. It was the sixth straight reading below 50. Meanwhile, the Manufacturing PMI decreased to 43.0 versus 43.4 prior, worse than expected of 43.7. The Services PMI fell to 47.8 versus 48.7 prior.
Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of German IFO data which is a key indicator of business confidence followed by a monetary speech from ECB President Christine Lagarde
With no major news out from the US traders will have to wait until Thursday for the release of the US Q3 Gross Domestic Product (GDP) figures which will also be accompanied by the ECB rate decision.