The euro (EUR) remained stable against the US dollar (USD) on Monday, with the EUR/USD pair sitting near recent highs it reached earlier in the day as traders looked over the latest ISM Manufacturing Purchasing Managers’ Index (PMI) data. As of now, EUR/USD is trading around 1.1631, marking its sixth consecutive day of gains.
There’s a growing sentiment that the US Federal Reserve might reduce interest rates further at its upcoming meeting on December 9-10, which is putting some pressure on the US dollar. The US Dollar Index (DXY), tracking the dollar’s value against a group of six major currencies, is around 99.20 after slipping to a two-week low of approximately 99.01.
Recent data from the US has sent mixed signals about the dollar’s strength. The ISM manufacturing PMI for November came in at 48.2, the lowest point in four months, down from 48.7 in October and also lower than the expected reading of 48.6. This indicates that the manufacturing sector has contracted for the ninth month in a row.
The new orders index dropped from 49.4 to 47.4, which is concerning since this marks three straight months of negative growth after a brief uptick in July. Meanwhile, the employment index fell from 46 to 44, while the prices paid index saw an increase, rising from 58 to 58.5.
On the other hand, the S&P Global US Manufacturing PMI presented a more encouraging view. This index increased to 52.2 from 51.9 in November, showing expansion for the fourth month in a row and pointing to better business conditions. It highlighted solid production growth and additional job gains, although there was a slowdown in demand and declining export orders for the fifth month running.
As for the eurozone, the recent HCOB Eurozone Manufacturing PMI revealed ongoing weakness in the region. The composite PMI for November was 49.6, down from 50 in October, which was slightly under the expected 49.7, marking the lowest level in five months.
Looking ahead, traders are setting their sights on significant macroeconomic announcements this week. On Tuesday, the preliminary figures for the Eurozone Core Harmonized Consumer Price Index (HICP) will come out, followed by the Eurozone Composite PMI, Services PMI, and Producer Price Index (PPI) on Wednesday.
In the US, the focus will shift to the ADP employment change report and the ISM services PMI, scheduled for Wednesday, before attention turns to the personal consumption expenditure (PCE) inflation report that is due on Friday.
