EUR/USD has recorded losses in the Thursday session. Currently, the pair is trading at 1.1564, down 0.27% on the day. In economic news, manufacturing PMIs in Germany and the eurozone softened in July and missed their estimates. In the U.S, unemployment claims are expected to rise to 215 thousand. It’s Day 1 of the Jackson Hole Symposium, a gathering of the heads of major central banks. On Friday, the U.S releases durable goods orders.
Manufacturing PMIs were a sore spot on Thursday, as German and eurozone releases were unexpectedly soft, pulling the euro lower. German Manufacturing PMI dropped from 57.3 to 56.1, while Eurozone Manufacturing PMI fell from 55.1 to 54.6 points. Global trade war tensions, as well as political worries in Italy have dampened the economic outlook in the eurozone, and manufacturing is perhaps the most vulnerable sector to the escalating trade war, notably between the U.S and China. Trade tensions continue to persist between the U.S and the EU as well, despite recent talks between senior officials. On Wednesday, President Trump threatened to slap a 25% tariff on all EU imports.
The Federal Reserve released the minutes of its July meeting, at which policymakers maintained the benchmark rate. The minutes noted that the U.S economy remains strong and hinted that the Fed would raise rates in September. However, policymakers added that there plan to continue with gradual rate increases could have to be halted if the global trade war worsened, as the trade war represented a major downside risk to the U.S economy. Fed Chair Jerome Powell will address the Jackson Hole Symposium on Friday, and investors will be listening carefully. Powell is expected to refer to trade tensions, as well as the fact that inflation and wage growth have lagged, despite a booming U.S economy. The minutes have cemented a rate hike in September, with market odds currently at 96%. The likelihood of a December rate hike stands at 57%.
