- EU business activity shows growth despite COVID-19 fears.
- Spotlight on U.S. PMI later today.
NOVEMBER PMI SURPRISE BEAT PUSHES EURO HIGHER
Eurozone PMI exceeded expectations this morning:
- Composite = 55.8, EST 53.2
- Manufacturing = 58.6, EST 57.3
A reading above 50 is suggestive of an expanding economy which was expected after Germany and France gave some indication to the estimate beat this morning when both countries announced positive prints. This may come as a surprise to many considering the current COVID-19 situation in Europe, and was reflected post-announcement with the Euro trading marginally higher against the greenback.
Closing off 2021 high energy prices, supply bottlenecks and COVID-19 concerns are likely to remain and hinder EU economic growth. This will not bode well for Euro bulls and could see further depreciation against the dollar.
Source: DailyFX Economic Calendar
The U.S. dollar gained further ground on the Euro yesterday after Fed Chair Jerome Powell was reelected. Markets consider Powell the “hawkish” choice but in reality he is far from a hawk, which leads me to believe the dollar rally will correct itself short-term. Later today, U.S. PMI data (see calendar above) could swing momentum back in favor of EUR/USD bears – data dependent.
EUR/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Contact and follow Warren on Twitter: @WVenketas