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EUR/USD Felt due To PMI Data and Powell’s Statement

by Didimax Team

Purchasing Manager’s Index or also known as PMI released a survey result. It showed that the EUROZONE is now facing an economy difficulty. That brings various effects in the market. 

One of them is market participants who are pushed to cut their expectation about an interest Rate increase which may be done by ECB. In the other side, a testimony made by Jerome Powell is raising the market optimism. 

That is related to the interest rate incresse in United States. That gap made the EUR / USD pair slumped by mode than 0.6% and reached it’s lowest daily position. 

It was around the level of 1.0482 at the beginning of the European session. There are many new things happened in the market right now such as from Germany and France. 

 

France and Germany Lost Their Momentum

Market economics reported that the Germany’s economy has lost the growth momentum that they have. That was at the end of second quarter period in this year. 

The export sector slumped where the economic uncertainty and inflation continued to weight on domestic demands. That is why; the PMI , especially for the service and manufactucturer sectors in that country slumped. 

The composite sector there declined. It was from 53.7 to become 51.3. That was far from a prediction made by consensus because they thought that the maximum decline will be 53.1.

The worse thing happened to France because their score was drastically declined from 57.0 in May to become 52.8 in June. That was a really huge decline in only one month period. 

The Worse Economic Growth Debate is Still Continued 

What was happened in France is unpredictable. Before, the consensus thought that the decline will be only 56.0. The worse economic situation in these countries bring the same trend for PMI score.

It is especially for the EuroZone from 54.8 to become 51.9. That was versus the consensus expectation of 54.0. The debate about worse economic growth, lower yield, and more triggers a debate. 

That is continued because PMI is a way under the expectation. Besides that, it also triggers the questions about how big ECB could really raise their rate is, just like an expert said lately.

The money market is then counting the total raise of ECB rate up to the end of 2022. The amount is around 161 basis point only. It was done ahead of the sequences of PMI data released lately 

Powell’s Statement Makes People Worry

Before, a calculation made by the market is around 176 basis point on this Monday. Elsewhere A statement made by Powell really make some people worry. 

Vice Vera with the Euro Dollar weakening, US dollar woke up from it’s worst situation. Some factors are becoming the factors for that such as a testimony made by Jerome powell.

The high interest on safe haven is also the result. Powell said in front of the congress aboutbThe Fed’s commitment. That is to control inflation although maybe this step may cause an economic slowdown. 

He was even said that recession is clear to happen, but the risk will be not too high. It is caused by the America’s economy which is quite strong at the present time. 

Market Participants Leave the High Risk Asset

Powell will continue his speech tonight. In the other side, market participants are panicked to the global economic growth prospect. That is why; they leave the high risk assets and choose Safe Haven. 

The index of United States Dollar is now higher. It rose by 0.4% and went to the level around 104.60. Meanwhile, the Japanese Yen also got the energy to leave it’s lowest record so far. 

The USD/JPY position slumped by 0.6% and reached the position of 135.40. The same trend also happened to GBP/JPY and EUR/JPY. These pairs felt by more than one percent based on a data. 

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