After a luckluster start to the week, EUR/USD has posted gains on Tuesday. Currently, the pair is trading at 1.1246, up 0.37% on the day. On the release front, the focus is on the service sector. German and eurozone services PMIs indicated expansion and beat their estimates. Eurozone retail sales slowed to 0.4%, but managed to beat the forecast of 0.2%. In the U.S., this week’s employment data kicks off with ADP nonfarm payrolls, which is projected to tick up to 184 thousand. As well, the ISM Non-Manufacturing PMI is expected to drop to 58.1 points.
After disappointing manufacturing PMIs in March, there was better news from services PMI reports. German and eurozone indicators came in at 55.4, and 53.3, respectively. This points to expansion, in contrast to the manufacturing PMIs, which are showing contraction. Investors are also concerned that the manufacturing PMIs have been falling for months. This is largely due to the global trade war, which continues to dampen manufacturing activity in Germany and the rest of the eurozone.
The U.S. economy remains strong, but this week’s key numbers have been anything but impressive. The weak durable goods orders data comes on the heels of soft retail sales numbers for March. Retail sales declined by 0.2%, shy of the estimate of +0.3%. Core retail sales declined by 0.4%, a sharp drop from the 0.9% gain a month earlier. Both indicators posted a second decline in three months, which is bound to raise concerns about the strength of the economy. There are concerns that the economy could be slowing down – growth for the first quarter could be as low as 0.8% annualized, compared to 2.2% in the fourth quarter.
