EUR/USD has started the week with slight gains. Currently, the pair is trading at 1.1185, up 0.15% on the day. On the release front, German manufacturing PMI ticked lower to 44.3, down from 44.4. The Eurozone indicator dropped from 47.9 to 47.7. Both scores matched the estimates. In the U.S., ISM Manufacturing PMI is expected to rise to 53.0, up from 52.8 in the previous release. On Tuesday, the eurozone releases CPI Flash Estimate.
Weak global demand has taken a toll on German and eurozone manufacturing. In Germany, manufacturing PMIs have hovered below the 50-level for five months, while the eurozone indicator has been below 50 for four months. This points to persistent contraction in the manufacturing sector. The trade war between the U.S. and China has dampened demand for German cars, which has hurt the massive German car industry. Unless the U.S.-China trade war shows signs of being resolved, weak manufacturing data is likely to continue.
The U.S. economy continues to perform well, with first-quarter growth above the 3% level. Second estimate GDP posted a gain of 3.1%, matching the estimate. This was just shy of the initial estimate in April, which came in at 3.1%. The U.S. economy is firing on all cylinders, despite the nasty trade war with China, which has escalated in recent weeks. U.S. officials, including President Trump, had announced that substantial progress had been made, and it seemed that a trade deal was just around the corner. However, Trump shocked the markets by slapping further tariffs on China, which led to counter-tariffs against U.S. products. China has reacted angrily to U.S. trade sanctions on Huawei, a giant Chinese telecom company. The euro has managed to weather the latest crisis in the U.S.-China trade war, but if there is no improvement, investors could opt for the safety of the greenback, at the expense of the euro/investing,com
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