It’s been a relatively quiet week for EUR/USD, and pair is unchanged on Thursday. Currently, the pair is trading at 1.1341, up 0.04% on the day. It’s a very busy day for fundamentals in the eurozone and the United States. German CPI declined 0.8%, matching the forecast. Manufacturing data was dismal, as German and eurozone manufacturing PMIs dropped below the 50-level, pointing to contraction. Services PMIs were stronger, as the German and eurozone readings indicated expansion. In the U.S., the markets are expecting positive news. Durable goods orders is projected to post a strong gain of 1.6%, while unemployment claims is forecast to fall to 228 thousand.
The global trade war continues to weigh on the manufacturing sectors worldwide, and the eurozone and Germany have not been immune. German manufacturing PMI fell to 47.6, its second successive contraction. This was the lowest level since December 2012. The all-euro reading slipped to 49.2, its first contraction since June 2013. Earlier this week, ZEW economic sentiment surveys posted scores deep in negative territory for Germany and the eurozone. With the German locomotive showing clear signs of a slowdown, the ECB is unlikely to raise rates in the near future, possibly holding off until 2020.
The Federal Reserve minutes release failed to excite investors, as the euro is showing little movement. Policymakers spelled out that the Fed will remain cautious, stating that a “patient approach to monetary policy” was appropriate. However, policymakers added that if economic projections improved, the Fed could revise the “patient approach”. The minutes noted that the employment market had strengthened and economic activity was rising, but expected GDP in 2019 to slow down compared to 2018.
