The euro has edged lower in the Monday session. Currently, EUR/USD is trading at 1.1650. On the release front, it’s a busy day in the eurozone. German and Eurozone Manufacturing PMIs softened in July and missed expectations. In the US, today’s key event is Existing Home Sales, which is expected to drop to 5.59 million. On Tuesday, Germany will release Ifo Business Climate and the US publishes CB Consumer Confidence.
Eurozone and German manufacturing PMIs dropped in July, disappointing the markets. Still the indicators point to continuing expansion in the German and eurozone manufacturing sectors. This is a result of stronger global demand for European exports, as well as an improvement in domestic consumer consumption. The euro enjoyed a strong week, gaining 1.6%. Earlier on Monday, EUR/USD touched a high of 1.1684, its highest level since August 2015. On Thursday, the ECB held the course on monetary policy, keeping interest rates at 0.00% and the bank’s asset-purchase scheme at EUR 60 billion/month. With no news in the rate statement, the markets focused on the ECB President Mario Draghi’s press conference. Draghi sounded upbeat about the eurozone economy, noting there were signs of ‘unquestionable improvement’ in the eurozone economy. Draghi acknowledged that inflation remains stubbornly low, and said that it was a question of time until the stronger economic conditions pushed inflation to higher levels. As for monetary policy, Draghi said the bank had not set an exact time for revisiting any changes to the current accommodative policy, but added that the ECB would review policy in September. These comments did not seem to break any new ground, but were perceived as hawkish by the markets and boosted the euro on Thursday.
It was another rough week for President Trump. Early in the week, Trump’s cherished flagship healthcare proposal, which aims to replace Obamacare, stalled in the Senate after two Republican senators said they would not support the bill. Trump has failed to pass any significant legislation so far in his term, and investors are becoming more skeptical as to whether Trump will have any more success with his tax reform and fiscal spending plans. With the Democrats forming a rock-solid wall of opposition, dissension among Republican lawmakers, many of whom are uneasy about Trump, could doom attempts by the White House to get bills through Congress. There was more bad news as Robert Mueller, the special counsel who is investigating alleged collusion between Trump and Russian officials during the US election, said he would review business transactions involving Trump as well as his associates. Trump has said that Mueller’s scope is limited to Russia, so the stage could be set for a Nixon-type showdown between the president and the special counsel investigating wrongdoing by the president.
