The news saw EUR/USD climb to roughly US$1.0363 at the time of writing, a rise of around 0.5% from Thursday’s opening rates.
Chiefly, the manufacturing index fell from 50.4 to 47.6, striking a 30-month low. Similarly poor was the services index, which fell to a three-month low of 46.1.
Commenting on the American data, Williamson explored the impact the data may have on the US economy.
He stated: ‘Business conditions across the US worsened in November, according to the preliminary PMI survey findings, with output and demand falling at increased rates, consistent with the economy contracting at an annualised rate of 1%. Companies are reporting increasing headwinds from the rising cost of living, tightening financial conditions – notably higher borrowing costs – and weakened demand across both home and export markets.’
Elsewhere, positive risk-sentiment across markets served to further weigh on the safe-haven ‘Greenback’ during Wednesday’s trade. With investors seeking more promising avenues of investment, the US Dollar fell short.
Euro (EUR) Exchange Rates Muted by Private Sector Contractions
The Euro (EUR) saw mixed trade on Wednesday, as EU private sector PMI releases demonstrated contractions. However, the negative correlation the currency holds with the US Dollar (USD) allowed the single currency to make strong gains against the weakening ‘Greenback.’
While the manufacturing index climbed from 46.4 to 47.3, it still remained in contraction territory. The services index reported no change, remaining at 48.6. As such, recession anxiety for the Eurozone intensified.
Chris Williamson, the Chief Business Economist at S&P Global Market Intelligence, explored the implications the data had for the Eurozone’s economic outlook.
Williamson stated: ‘However, it’s clear that manufacturing remains in a worryingly severe downturn, and service sector activity is also still under intense pressure, both largely as a result of the cost of living crisis and recent tightening of financial conditions. A recession therefore looks likely, though the latest data provide hope that the scale of the downturn may not be as severe as previously feared.’
Furthering weighing on the Euro during Tuesday’s session was developments in the Ukraine-Russia conflict. With Russia continuing to barrage Ukrainian infrastructure with missiles, it had the knock on effect of causing a massive blackout in Moldova.
Euro US Dollar (EUR/USD) Exchange Rate Forecast: Central Bank Meeting Minutes in Focus
Looking ahead for the Euro US Dollar (EUR/USD) exchange rate, both sides of the pairing will see the release of their respective central bank’s meeting minutes.
Wednesday evening brings the the Federal Open Market Committee’s (FOMC) meeting minutes. Investors will keep a close eye on these, hoping for further hawkish indications of continued aggressive rate hiking. Should this come to pass, USD may strengthen.
Thursday sees the publication of the European Central Bank’s (ECB) meeting minutes. Recent days have seen ECB policymakers strike a dovish tone. If the minutes confirm this pivot in attitude, EUR may weaken.
Elsewhere, policymakers from the ECB are scheduled to speak on Thursday. If they also display dovish rhetoric, EUR may sink further.
Thanksgiving will occur on Thursday, meaning that US markets will be closed. As such, the US Dollar will be beholden to external factors shaping the currency’s direction, such as risk-sentiment in the market.