Forex: EUR/USD – Limited gains for US dollar

on Jul 1, 2013
Listen Monday July 1th: The day’s softness in the euro has carried over from the European to the early American session and since the release of the latest US manufacturing data the pair has fallen to 1.3021. Despite the positive tone for the USD, the pair has been barely affected by the data, having already fallen from the 1.3060 daily high so far.

The Markit US manufacturing PMI for June came out stronger than expected. The final reading was 51.9, still lower than the 52.3 in May.
The Institute for Supply Management (ISM) Manufacturing PMI also produced better than expected results. The index rose to 50.9 points in June, above the forecast for 50.5 and the previous 49.0 points.
Construction Spending grew by just 0.5 percent in May, against expectations for 0.6 percent and ISM Prices Paid last month came in at 52.5, exceeding expectations for 51.5.

But the euro also received support earlier today.
The German Manufacturing Purchasing Managers Index recorded a decline to 48.6 points in June, down from May’s 49.4, but the Eurozone June Manufacturing PMI rose to 48.8 from 48.3 in May.
According to preliminary data released today by Eurostat, the Eurozone annual inflation rose by 1.6 percent in June, following 1.4 percent growth the prior month and in line with forecasts. Annual Eurozone CPI-Core remained at 1.2 percent growth in June.

Eurozone unemployment increased to 12.1 percent in May, above April’s 12.0 percent but slightly better than the expected rise to 12.3.
Both the US and the EU data provide mixed signals. The pace of economic recovery in the United States, despite more positive than negative content in the updates, has yet to provide solid support for the USD and real confidence as to when the Fed will actually start tapering the $85 billion/month QE programme.
Friday will see release of the June US non-farm payrolls and unemployment, which taken together can be expected to materially impact the Fed’s future plans for monetary stimulus.