Euro US Dollar Exchange Rate Steady, US Non-Manufacturing PMI Falls Below Forecasts

December 4, 2019 – Written by John Cameron

EUR/USD Exchange Rate Rangebound, US Economy is ‘Slowing’

The Euro US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $ 1.109 after the US ISM Non-Manufacturing PMI for November fell below forecasts from 54.7 to 53.9, weakening market confidence in the US economy.

Today also saw the publication of the US ADP employment change figure for November, which undercut expectations and slipped from 121 thousand to 67 thousand.

Andrew Grantham, an Economist at CIBC World Markets, commented:

‘What today’s number does seem to suggest is that underlying momentum in the U.S. economy is slowing, with the 3-month average of the ADP survey pretty consistent with the circa 1% growth rate we are forecasting for fourth-quarter GDP.’

The US Dollar has continued to benefit from its safe-haven status, however, as uncertainty over US-China trade negotiations increase after US President Donald Trump’s comment that a trade deal may have to wait until after the 2020 presidential elections.

However, today he appeared to change his tune at the NATO meeting, saying that trade talks were going well between Washington and Beijing.

As a result, the USD/EUR exchange rate has remained static on mixed-signals around a possible trade deal this year.

EUR/USD Exchange Rate Steady as ECB Policy Stimulus Fears Weighs on Euro

The Euro (EUR) failed to gain on the US Dollar (USD) after the Eurozone’s Markit PMI failed to uplift market sentiment in the single currency.

Chris Williamson, Chief Business Economist at IHS Markit, was downbeat in his analysis, saying:

‘The near-stalling of the economy has been accompanied by some of the weakest price pressures we’ve seen in recent years, which threatens to keep inflation well below the ECB’s target in coming months and adds to the likelihood of further policy stimulus early next year.’

With the Eurozone’s powerhouse economy, Germany, continuing to struggle, market confidence in the European currency has suffered today.

Ongoing US-China trade tensions are also leaving many EUR investors feeling jittery, as this could have an adverse effect on the Eurozone’s economy in the near-term.

EUR/USD Outlook: US Jobs Data in Focus

Euro (EUR) investors will be looking ahead to tomorrow’s publication of the Eurozone’s GDP figure for the third quarter, with any surprise signs of an uptick likely to boost the EUR/USD exchange rate.

Tomorrow will also see the release of Germany’s factory orders figure for October, which is expected to rise by 0.3%.

US Dollar (USD) traders, meanwhile, will be awaiting tomorrow’s release of the US jobs figures, with any signs of improvement in the American employment sector likely buoying the ‘Greenback’.

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TAGS: American Dollar Forecasts Euro Pound Forecasts