EUR in Relief Rally vs US Dollar as Confidence Improves but Composite PMI Revision Weighs
The Euro Dollar Exchange Rate is 0.11 pct higher at 1.3186. See our latest technical forecast note for the Euro Dollar here.
The Euro Pound Exchange Rate is 0.28 pct in the red at 0.8443. UK Services PMI's are responsible for the weakness in this pair.
The Euro Australian Dollar Exchange Rate is 0.98 pct higher at 1.4391. See why the Aussie is the star of today's trading session.
Please Note: These are wholesale quotes; your bank will levy a discretionary spread when passing their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here.
The Euro has been unable to stage a more convincing rally against the US Dollar thanks to a downward revision to last month's composite Eurozone PMI data; Euro Area Composite PMI fell to 51.5 from 51.7 at final pass in August.
Nevertheless, some relief for the Euro is warranted "as the repetitive news headlines about a crippled eurozone are slowly being replaced with more positive ones," says David Madden at IG in London.
The latest services purchasing managers index (PMI) for Spain came in at 50.4, which compares with a reading of 48.5 in July and provides evidence that the Spanish services sector expanded for the first time in over two years.
"The eurozone as a whole announced a reported final services PMI of 50.7 in August, which is also the highest reading in two years. This boosted investors' confidence in the currency as the region may be turning a corner," says Madden.
Signs that the US recovery is taking hold has continued to keep the euro on the back foot this week, as the case for the Fed to withdraw stimulus builds. Strong Spanish Services figures alongside bad Italian ones will keep the euro vulnerable.
"We expect mixed PMI figures will prevent the EUR from recovering against the US dollar. Consequently we predict the EURUSD rate will remain at the $1.31 level," says Sash Nugent at Caxton FX.
However, "traders are still find buying interest in EUR at the current levels and despite the strengthening negative momentum, EUR remains a solid destination for EM outflows," says Ipek Ozkardeskaya at Swissquote.
From net 0.214 million short future contracts, we have jumped to +40 000 long net open interests in euro futures last week.
On the option markets however, large euro puts expiring today are seen at 1.3125/50, while stops are mixed below.