The Euro US Dollar (EUR/USD) exchange rate rallied on Wednesday, as US private sector PMIs showed a shock contraction in manufacturing, despite an otherwise muted session for the Euro.
The news saw EUR/USD climb to roughly US$1.0363 at the time of writing, a rise of around 0.5% from Thursday’s opening rates.
The US Dollar (USD) weakened against most peers on Wednesday, as PMI data for the US private sector printed below forecast.
Chiefly, the manufacturing index fell from 50.4 to 47.6, striking a 30-month low. Similarly poor was the services index, which fell to a three-month low of 46.1.
Commenting on the American data, Williamson explored the impact the data may have on the US economy.
Elsewhere, positive risk-sentiment across markets served to further weigh on the safe-haven ‘Greenback’ during Wednesday’s trade. With investors seeking more promising avenues of investment, the US Dollar fell short. 
The Euro (EUR) saw mixed trade on Wednesday, as EU private sector PMI releases demonstrated contractions. However, the negative correlation the currency holds with the US Dollar (USD) allowed the single currency to make strong gains against the weakening ‘Greenback.’
While the manufacturing index climbed from 46.4 to 47.3, it still remained in contraction territory. The services index reported no change, remaining at 48.6. As such, recession anxiety for the Eurozone intensified.
Chris Williamson, the Chief Business Economist at S&P Global Market Intelligence, explored the implications the data had for the Eurozone’s economic outlook.
Furthering weighing on the Euro during Tuesday’s session was developments in the Ukraine-Russia conflict. With Russia continuing to barrage Ukrainian infrastructure with missiles, it had the knock on effect of causing a massive blackout in Moldova.
Looking ahead for the Euro US Dollar (EUR/USD) exchange rate, both sides of the pairing will see the release of their respective central bank’s meeting minutes.
Wednesday evening brings the the Federal Open Market Committee’s (FOMC) meeting minutes. Investors will keep a close eye on these, hoping for further hawkish indications of continued aggressive rate hiking. Should this come to pass, USD may strengthen.
Thursday sees the publication of the European Central Bank’s (ECB) meeting minutes. Recent days have seen ECB policymakers strike a dovish tone. If the minutes confirm this pivot in attitude, EUR may weaken.
Elsewhere, policymakers from the ECB are scheduled to speak on Thursday. If they also display dovish rhetoric, EUR may sink further.
Thanksgiving will occur on Thursday, meaning that US markets will be closed. As such, the US Dollar will be beholden to external factors shaping the currency’s direction, such as risk-sentiment in the market.
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Euro US Dollar Exchange Rate Rallies – Exchange Rates UK
