EURUSD, H1
Eurozone services PMI revised down to 54.2 from 54.4 reported initially and versus 55.2 in the previous month. A clear drop in confidence then, that wasn’t fully counterbalanced by the improved manufacturing reading and left the composite at 54.3, unchanged from the preliminary release and down from 54.9 in June, indicating a further slowdown in the pace of economic expansion. Markit reported that the principle factor underlying the slowdown was a weaker expansion in new work received, with new business growth the second-slowest in over one-and-a half years, with only Germany reporting an improvement. The survey also showed a modest easing in price pressures, although Markit highlighted that “rates of inflation in output charges and input costs remained elevated and above their respective long-run averages”. Pretty much in line with the central bank’s main scenario then that is based on slowing growth and a gradual return of underlying inflation towards the target.
The news added to the weight on the EURUSD as it slipped further to its lowest level since June 29 at 1.1561. The fundamentals remain to the downside, with the FOMC expected to move rates in September and then again in December. On the other hand, the ECB is still providing substantial assistance to the Eurozone countries and not looking to move rates to the north “through summer 2019” so at least 15 and possibly 18 months away.
US Non-Farm Payrolls next at 12:30 GMT.
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Stuart Cowell
Head Market Analyst
HotForex
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