The moment awaited by many investors has arrived: the publication of PMIs in the eurozone, corresponding to the month of June. Tuesday is loaded with solid macro data of utmost importance to the Forex Market, and thanks to them, the price of the euro rose.
We will also briefly look at the performances of other currencies on the Forex Market, such as the Australian Dollar, the Chinese Yuan, the Japanese Yen, and the Norwegian Krone.
Here is a complete analysis of the Forex Market …
Forex Market: The price of the Euro rises thanks to macro data, such as the PMI
Private consultancy Markit published the eurozone PMIs, presenting more positive recovery figures than expected. The case of France stands out especially, recovering after an unprecedented three-month drop.
The French PMI presented a composite reading of 51.3, with 50.3 in the service sector and 52.1 in the manufacturing sector. The values were above expectations, and exceed 50 points that indicate growth.
The eurozone compound PMI gave a figure of 47.5, fifteen points above the 31.9 seen in May. Other interesting results were those of Germany, where the composite PMI rises to 45.8 points as in the service sector, and 46.9 in manufacturing.
All these values directly affect the price of the euro, which increases 0.6% and rises to $ 1.1325. This is its highest level since June 16, representing investors’ hope for possible economic growth.
George Buckley, economist at Nomura, opines about this feeling:
“The good news is that activity is starting to pick up. The least positive is that demand is lagging and remains moderate (…) However, excluding the possibility of a second wave, demand should also recover, albeit at a slower rate, as consumer confidence increases and companies“
Australian dollar and Japanese yen react to Peter Navarro’s remarks
Since we know that the price of the euro is rising, other currencies have also risen after White House trade adviser Peter Navarro retracted his comment on the US trade deal. with China. In his words, the agreement had “ended”.
Navarro said Monday that the trade agreement was still in place, after his previous comment fueled volatility in the markets. He said it had been taken “wildly out of context.” The president of that country, Donald Trump, expressed through a tweet that the trade agreement is “completely intact”.
The Australian dollar rose 0.7% to 0.6950, after hitting 0.6977, its highest level since June 16.
The Japanese yen, which was considered a safe haven, remains low against the dollar at 106.47.
The clarification of Navarro’s comment benefited some currencies, but in some way harmed others. As the price of the euro rises, along with the value of the Australian dollar, the yen fails to follow the same path.
Lee Hardman, a currency analyst at Mitsubishi UFJ Financial Group, elaborates on his view of Trump’s stance and the market outlook:
“We hope that the consequences will be limited and that President Trump will remain committed to the first phase of the trade agreement in the run-up to the elections (…) However, the activity that took place in prices indicates that the foreign exchange market remains sensitive to the uncertainty of trade policy. It remains a possible trigger for increased volatility“
As the euro increases, the Chinese yuan and the Norwegian krone recover
To finish, the Chinese yuan offshore reduced many of its previous losses, remaining at a level of 7.0576 per dollar in the OTC market.
Furthermore, Scandinavian currencies also recovered. The Norwegian krone rises more than 1% against the dollar and 0.7% against the euro.
The price of the euro increases, and that bodes well for various analysts in the Forex Market. Although, it is clear that these strong oscillations of the currencies come when the market is divided.
Between the hopes of an economic reopening in many parts of the world and the reappearance of cases of contagion by COVID-19, investors in the Forex Market remain alert to any change.