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EUR/USD Retreats as Initial Jobless Claims Continue to Decline, PMIs Beat Expectations

May 21, 2020 by

EUR/USD was rising today but has reversed its movement at 12:30 GMT and was falling ever since, dropping below the opening level by now. The possible reason for the retreat was US macroeconomic data, which included steadily declining jobless claims and better-than-expected PMI prints from Markit.

Philadelphia Fed manufacturing index rebounded to -43.1 in May from the 40-year low of -56.6 reached in April. Market participants were hoping for a somewhat bigger bounce to -40.0. (Event A on the chart.)

The seasonally adjusted number of initial jobless claims continued to fall, dropping to 2,438k last week from the revised level of 2,687k (2,981k before the revision). Nevertheless, the actual figure was slightly bigger than the median forecast of 2,400k. (Event A on the chart.)

Markit released flash readings for manufacturing and services PMIs in May. Markit manufacturing PMI rose to 39.8 from 36.1 in April versus the consensus forecast of 39.3. Markit services PMI climbed to 36.9 from 26.7, also beating the consensus forecast of 32.6. (Event B on the chart.)

Leading indicators fell 4.4% in April. That is compared with a decline of 5.5% predicted by analysts and a drop of 7.4% registered in March (revised down from 6.7%). (Event C on the chart.)

Existing home sales dropped to a seasonally adjusted annual rate of 4.33 million in April from 5.27 million in March, in line with market expectations of 4.31 million. (Event C on the chart.)

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

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