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Fresh Eurozone manufacturing contraction set to knock euro

business-articlesFresh Eurozone manufacturing contraction set to knock euro
  • Another month of weak Eurozone PMIs could dent euro
  • New Zealand dollar under pressure ahead of trade data
  • Canadian dollar looks for boost on wholesale trade sales
 
 Euro vulnerable to weaker Eurozone PMIs
 
Demand for the euro may diminish once again this morning if May’s Eurozone manufacturing and services PMIs point towards a continued loss of economic momentum.
 
Another month of contraction for the manufacturing sector could weigh heavily on EUR exchange rates, with signs already pointing towards a weaker second quarter for the Eurozone.
 
Unless the manufacturing PMI edges back into growth territory the single currency looks set to trend lower across the board today.
 
Signs of resilience within the service sector, however, could help to limit the pressure on the euro as this may offset some of the manufacturing slowdown.
 
 
Narrowed trade surplus to weigh on New Zealand dollar
 
NZD exchange rates look set to come under further pressure tonight as forecasts point towards the trade surplus narrowing in April.
 
With investors expecting to see the trade surplus narrow from 922 million to 400 million confidence in the underlying health of the New Zealand economy is likely to deteriorate.
 
A sharp decline in export volumes could weigh heavily on the New Zealand dollar, particularly given ongoing global trade tensions and the prospect of a wider trade slowdown.
 
As weaker levels of trade could translate into weaker domestic growth any softness here is likely to drive NZD exchange rates into a fresh slump.
 
 
Canadian dollar shakes off oil price downturn
 
Although oil prices returned to a downtrend in the face of rising US production yesterday the impact on the Canadian dollar proved limited.
 
A fresh boost could be in store for CAD exchange rates this afternoon, though, as investors anticipate an uptick in wholesale trade sales on the month.
 
As sales are expected to show fresh growth confidence in the outlook of the Canadian economy may improve as the case for monetary policy loosening eases.
 
However, if the wholesale trade sales data fails to point towards a robust economy this could leave the Canadian dollar exposed to selling pressure.
 
 
Upcoming Data:
 
Thursday, 23rd May 2019
09:00 EUR Eurozone Manufacturing PMI
09:00 EUR Eurozone Services PMI
13:30 CAD Wholesale Trade Sales
23:45 NZD Trade Balance
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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