EUR/USD has ticked lower in the Monday session. Currently, the pair is trading at 1.1328, down 0.10% on the day. It’s a busy day in the eurozone, with the focus on services PMI reports. Germany and the eurozone services PMI both improved in February, with readings of 55.1 and 52.3, respectively. Eurozone retail sales rebounded with a strong gain of 1.3%. In the U.S., the key event is ISM Non-Manufacturing PMI, which is expected to climb to 57.4 points. In the U.S., employment numbers will be in the spotlight for the remainder of the week, starting with ADP nonfarm payrolls on Wednesday.
The eurozone services sector has looked stronger than manufacturing, which continues to struggle. German Final Services PMI climbed to 55.3 in February, marking a 5-month high. The eurozone release also improved, although the score of 52.3 points to weak expansion. France and Italy both pulled themselves out of contraction territory, but the scores were just above 50, pointing to stagnation. Meanwhile, consumer spending rebounded in January, after sustaining declines in December. German retail sales jumped 3.3%, while the eurozone release climbed 1.3%.
Germany is a bellwether for the rest of the eurozone, and Friday’s data pointed to a strong labor market but trouble in the manufacturing sector. On the employment front, German unemployment rolls fell by 21 thousand, crushing the estimate of -5 thousand. The eurozone unemployment rate dropped to 7.8% in January, down from 7.9% a month earlier. The manufacturing industry continues to struggle, as the global trade war has reduced the demand for European exports. German and eurozone manufacturing PMIs in February came in below the 50-mark, which separates contraction from expansion.
To sum up, although rising oil prices in this year may have been supporting the loonie, however, a dovish BoC could keep the currency’s gains limited.
