EUR/USD has steadied in the Friday session, after posting considerable losses on Thursday. Currently, the pair is trading at 1.1317, down 0.23% on the day. On the release front, it’s a quiet end to the week. The sole eurozone events, German Ifo Business Climate, fell for a fifth successive month, dropping to 99.1 points. There are no U.S events on the schedule.
There were no surprises from the ECB on Thursday, as the central bank maintained policy as well as guidance for “rates to remain at their present levels at least through the summer of 2019”. With the ECB finally winding up its massive stimulus scheme, market focus has shifted to the timing of a rate hike. However, with the eurozone economy showing signs of weakness, we’re unlikely to see a rate hike before the fourth quarter, at the earliest. The ECB remains cautious, and said that risks “have moved to the downside”. This dovish stance indicates that the euro will not be receiving any support from the bank, and will have to rely on stronger data in order to attract investors.
The eurozone manufacturing sector continues to show worrying signs of a slowdown. Eurozone manufacturing PMI fell to 50.5, just above the 50-point threshold which separates contraction from expansion. This marked a six successive drop in the score. Germany fared even worse, as manufacturing PMI slipped to 49.7, pointing to contraction. It was the lowest reading since June 2013. The weak reading underscore the toll that the global trade war has taken on the eurozone and German economies, with less demand for exports weighing on manufacturing production.