September has kicked off with an extension of previous trends – higher stocks and a fall in the dollar. EUR/USD is trading close to 1.20, fueled by several encouraging factors. New German forecasts and the ISM Manufacturing PMI are awaited, Yohay Elam, an analyst at FXStreet, reports.
Key quotes
“Federal Reserve Vice-Chair Richard Clarida clarified that the Fed is currently not considering new measures such as Yield Curve Control or negative borrowing costs in the near future. Staying on the sidelines makes sense after the immense stimulus enacted by the bank earlier this year and the upcoming elections. However, politics could push the Fed into more action. Democrats and Republicans remain entrenched in their positions about the next fiscal stimulus If lawmakers continue dithering, the Fed may step in with more measures.”
“The ISM Manufacturing Purchasing Managers’ Index for August will shed some light on how the world’s largest economy is doing – and serve as the first hint toward Friday’s jobs report. The headline is forecast to point to growth while the employment component is likely to contract once again.”
“EUR/USD’s rise is also driven by factors outside America. China’s independent Caixin Manufacturing PMI beat estimates with 53.1 points in August, showing that the Asian giant continues recovering from the COVID-19 fallout. AstraZeneca, a British pharmaceutical firm, announced the beginning of a broad and 50,000-strong test for its coronavirus vaccine candidate.”
“Back in the old continent, manufacturing PMIs are set to show moderate growth in August, with the exception of France, where the initial read came out at 49, reflecting contraction. COVID-19 cases are rising quickly in the eurozone’s second-largest economy. Concerns are rising about the fourth-largest, Spain.”
“In the meantime, Europe’s locomotive Germany is powering forward. Economy Minister Peter Altmaier is set to publish an upgraded growth forecast. Reports of the expected announcement are already underpinning the euro.”
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