EU Flash data misses
Dollar finds bid
Nikkei 0.17 Dax 0.31
UST 10Y 0.64
Asia and the EU
EU Flash PMI 50 vs. 54
UK Flash PMI 60 vs 57
North America Open
CAD Retail Sales 8:30
USD Flash PMI 9:45
USD Existing Home 10:00
Flash PMI data weighed on the EURUSD in quiet Friday trade today with the index missing its mark badly as economic activity in Europe slowed materially in August.
According to Markit, “Differing trends were recorded across the two sectors covered during August. Service providers recorded broadly unchanged levels of business
activity from those seen in July. On the other hand, manufacturing production rose sharply, with the rate of growth quickening to the fastest since April 2018.
New orders increased for the second successive month, but as was the case with activity the rate of growth slowed midway through the third quarter. Growth of total new business was undermined by a fall in new export orders*, itself driven by a sharp decline in new business from abroad at service providers as travel restrictions were reimposed in some countries following rises in COVID-19 cases.”
The resurgence in COVID cases is clearly creating a pall on the economic recovery in Europe and should the continent see a resurgence of infections for a second wave the bullish case for a rebound will be greatly undermined threatening the rally in EURUSD. The pair slipped below the 1.1800 level in European dealing today and could wipe out longer-term stops at 1.1750 if the US data surprises to the upside later in the day.
Today the only report of note is the US Flash PMI report with markets looking for a further creep upward through the 50 boom/bust level, but if the data prints materially better the short-covering rally in the dollar could pick up the pace and the EURUSD could be lower by more than 1% by end of day as markets adjust the other way.