- EUR/USD remained steady on Tuesday after PMI data indicated a slowdown in momentum on both sides of the Atlantic.
- The US S&P Global Composite PMI dipped to 53.6 in September.
- Traders are awaiting Powell’s comments at 16:35 GMT, following signals from Bowman and Goolsbee.
The euro (EUR) is treading water against the US dollar (USD) on Tuesday as the Reserve Purchase Manager Index (PMI) from both regions shows waning momentum. It appears that US private sector output is still expanding, albeit at a slower rate.
Currently, EUR/USD is trading around 1.1800. The US Dollar Index (DXY), which gauges the dollar’s value against a basket of six major currencies, is hovering near 97.35. The market response to the PMI data has been muted, with traders focusing on upcoming remarks from Federal Reserve Chairman Jerome Powell at 16:35 GMT, which are expected to signal potential shifts in financial policy.
In the US, the S&P Global Composite PMI has dropped to 53.6, a preliminary September reading that is below the forecast of 50.6 and previous levels, yet still above the 50 mark. The production PMI remains stable at 52, matching expectations but down from 53 in August, while the service PMI fell to 53.9 from 54.5 last month, also in line with predictions. This suggests that while US private sector growth is slowing, it is not contracting.
Across the Atlantic, the eurozone’s combined PMI rose to 51.2 in the preliminary September reading, slightly exceeding the expectation of 51.1 and up from August’s figure. The service PMI improved to 51.4, rising from 50.5 in August and surpassing forecasts. Conversely, the production PMI slipped back into contraction territory at 49.5, significantly below the expected 50.9 and down from 50.7 in August.
The dollar is also receiving support from cautious statements from the Federal Reserve. Vice Chair Michelle W. Bowman noted on Tuesday that adjustments made last week should be viewed as a first step toward a more neutral monetary stance, cautioning that the labor market might weaken quickly and adjustments could be necessary if certain risks materialize. Fed’s Austan Goolsbee indicated potential rate cuts could occur if inflation trends align with targets, but he emphasized the current policy is somewhat restrictive, hinting that the neutral rate is likely below the 100-125 basis points range.
