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EUR/USD Climbs amid Investors’ Optimism

June 3, 2020 by

EUR/USD climbed today as market participants felt optimistic about the end of the quarantine measures that were implemented to prevent the spread of the COVID-19 but also strongly hurt the global economy. As for US macroeconomic reports, they were generally better than expected. In particular, the ADP employment showed a far smaller decline than analysts had predicted, leaving experts scratching their heads about reasons for such a discrepancy.

ADP employment fell by 2,760k in May. While a very big decline by itself, it was far smaller than 9,000k predicted by experts. Furthermore, the April reading got a positive revision from a drop of 20,236k to 19,557k. (Event A on the chart.)

Markit services PMI rose to 37.5 in May from April’s record low of 26.7 according to the final estimate. The actual figure was slightly better than the flash reading of 36.9 and the analysts’ consensus forecast of 37.2. (Event B on the chart.)

ISM services PMI rose to 45.4% in May from 41.8% in April. It was also better than the market consensus of 44.2%. (Event C on the chart.)

Factory orders dropped by 13.0% in April. Still, the drop was not as big as 13.7% predicted by specialists. The March reading got a negative revision from a fall of 10.3% to 11.0%. (Event C on the chart.)

US crude oil inventories fell by 2.1 million barrels last week, surprising analysts who were counting on a 3.0 million barrel increase. Despite the decline, the stockpiles remained far above the five-year average for this time of year. The reserves climbed by 7.9 million barrels the week before. Total motor gasoline inventories increased by 2.8 million barrels and were also above the five-year average. (Event D on the chart.)

On Monday, several reports were released (not shown on the chart):

Markit manufacturing PMI rose to 39.8 in May from 36.1 in the previous month according to the final estimate, matching market expectations and the preliminary estimate.

ISM manufacturing PMI rose to 43.1% in May from 41.5% in April but missed the market consensus of 43.5% slightly.

Construction spending fell 2.9% in April from March but the drop was much smaller than 6.5% predicted by experts. The April reading was revised negatively from an increase of 0.9% to zero change.

If you have any comments on the recent EUR/USD action, please reply using the form below.

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