EUR/USD has posted considerable losses on Tuesday, after showing little movement in thin trade on the Labor Day holiday. Currently, the pair is trading at 1.1563, down 0.49% on the day. In the eurozone, industrial producer prices rose 0.4% in July. In the U.S, today’s key indicator is ISM Manufacturing PMI, which is expected to dip to 57.6 points. On Wednesday, Germany and the eurozone release Services PMI and we’ll also get a look at eurozone retail sales.
Eurozone and German manufacturing PMIs are still pointing to expansion, but there is concern in the markets as the downward trend continued in August. This was particularly evident in Eurozone Final Manufacturing PMI, which lost ground for an eighth straight month. The reading of 54.6, which matched the estimate, marked the lowest level since November 2016. In Germany, Final Manufacturing PMI fell from 56.9 to 55.9. Although this is a respectable reading, it is significantly lower than the readings we saw early in 2018, when the indicator was above the 60-level. German manufacturers remain generally optimistic, but have growing concerns over tariffs which the U.S has slapped on China and the EU.
In December, the ECB plans to wind up its asset-purchase program, which has been in play since March 2015. ECB policymakers have taken pains to provide themselves some wiggle room, saying that the program could be extended if inflation suddenly weakens. Still, the markets expect this stimulus plan to be terminated on schedule. In August, the Bank purchased EUR $29 billion, the lowest level since this stimulus program started. Traditionally, August is a quiet month, with many sellers on holiday.
