The Euro US Dollar (EUR USD) exchange rate surged by around half a cent from its worst levels this morning following the release of a string of upbeat Eurozone data.
The Eurozone’s private sector showed its strongest levels of growth since the start of the debt crisis in 2011 according to data compiled by IHS Markit as the bloc’s Services PMI jumped from 56.0 to 56.4 in April, beating expectations it would only rise to 56.2.
The upbeat Services data, combined with a strong Manufacturing PMI earlier in the week, led the composite PMI to rise from 56.4 to 56.8 last month, indicating that the Eurozone’s economic recovery is picking up speed.
Chris Williamson, Chief Business Economist at IHS Markit said;
‘The April Eurozone PMI is historically consistent with a GDP growth rate of 0.7%, with similar rates of expansion signalled for both Germany and France. Even faster gains are being indicated in Spain and Ireland and Italy is also seeing growth perk up, highlighting the increasingly broad-based nature of the current upturn.’
This growth was also reflected in March’s Retail Sales figures, strengthening EUR USD as retailers across the Eurozone reported better than expected activity at the end of the first quarter, with yearly sales surging from 1.7% to 2.3% and outpacing predictions that they would only climb to 2.1%.
Meanwhile, the US Dollar has slipped from its best levels after being strengthened yesterday by the latest Federal Reserve policy meeting, during which the central bank hinted at a June interest rate decision.
While the Fed voted to leave rates on hold in May, investors were optimistic following the Bank’s claim that the recent slowdown in US economic data was ‘likely to be transitory’ and that it expected growth to ‘expand at a moderate pace’ over the coming months, leading the odds of a rate hike next month to climb to over 70%.
Looking ahead the EUR USD exchange rate may advance further this afternoon following the release of the latest US employment data, as economists predict that the jobless rate will rise from 4.5% to 4.6% in April, despite an expected uptick in US non-farm payrolls figures over the same period.
Meanwhile the Euro may also be bolstered tomorrow by Germany’s latest Construction PMI if it rises from 56.4 as expected.
Current Interbank Exchange Rates
At the time of writing the EUR USD exchange rate was trending around 1.09 and the USD EUR exchange rate was trending around 0.94.
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