Home Daily Commentaries The Greenback trades flat amid weak PMI numbers in the US and Europe

The Greenback trades flat amid weak PMI numbers in the US and Europe

Wednesday 24 July, 2019

Daily Currency Update

USD - United States DollarThe US dollar index continued to rise following terrible numbers related to economic growth of the Eurozone. However, the Greenback is trading flat at the time of this writing, as stronger service sector growth helped offset the US manufacturing downturn in July. According to the IHS Markit, service sector companies recorded the sharpest rise in business activity since April. This helped to offset a downturn in manufacturing production in July. Although only marginal, the reduction in output across the goods-producing sector was the sharpest in almost ten years. Technically speaking, the US dollar index seems to hit a big wall around 97.71, a strong resistance that was confirmed by the EUR/USD pair testing a critical support level close to the 1.1100ish lows. This means that as long as the US dollar index does not cross above 97.71 and closes above that level, the US dollar index might weaken in the next few days. At the time of this writing, it is trading at 97.63.

Key Movers

onomic growth in the Eurozone continued to slow in July, driven by the worst performance in manufacturing in more than six years. The Purchasing Managers’ Index dropped to 51.5 from 52.2 in June. The decline was worse than expected, driven by factory output in Germany and France. German manufacturing continued to look increasingly gloomy, with the Purchasing Managers Index data coming in at the lowest level in seven years at 43.1 when the forecast was at 45.1. In France, the services PMI and manufacturing PMI came in at 52.2 and 50.0 versus the estimates of 52.7 and 51.6, respectively. Additionally, ECB President Mario Draghi might be inclined to appear aggressive and present a package of changes tomorrow. The EUR/USD pair fell around 25 pips to the lowest level, 1.1127, since May 31st. However, it has bounced to 1.1150 at the time of this writing. The Aussie dollar also plunged against all of its G-10 peers. For instance, the AUS/USD pair traded at 0.6987 at the time of this writing, touching a 12 day low at 0.6972 earlier today. The driver was a forecast by an influential Westpac economist, Bill Evans, who said that the next Australian rate cut might happen in October, adding that the RBA will probably lower its benchmark to 0.5 percent by February.

Expected Ranges

  • USD/CAD: 1.3098 - 1.3150 ▼
  • EUR/USD: 1.1112 - 1.1187 ▼
  • GBP/USD: 1.2471 - 1.2555 ▲
  • AUD/USD: 0.6953 - 0.7010 ▼
  • NZD/USD: 0.6670 - 0.6729 ▲