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EUR/USD Weakens as Coronavirus Takes Its Toll on US Employment

April 3, 2020 by

The US dollar continued to strengthen against the euro despite the unexpectedly poor employment data reported in the United States today. Perhaps, the reason is the fact that the European PMI indicators now look even more dismal as the pandemic hurts not only people’s health but also economic well-being of the eurozone nations.

US nonfarm payrolls decreased by 701k in March — the worst decline in 11 years. The NFP number added 275k in February. The reported drop was far worse than a -100k change predicted by analysts. Unemployment rate soared from 3.5% to 4.4% (compared to 3.8% forecast value). It is also important to note that the report doesn’t encompass the two worst weeks for US employment we had witnessed via initial jobless claims reports as the survey period for the month was from March 8 through March 14. (Event A on the chart.)

The final version of Markit services PMI for March demonstrated a decline from 49.4 in February to 39.8 in March (the flash estimate of was revised up from 39.1). Forex traders expected a sharper decrease — to 38.7. (Event B on the chart.)

ISM non-manufacturing PMI declined from 57.3 to 52.5 in March and was much better than the pessimistic forecasts of 43.5, remaining in the expansion territory despite the devastating damage to the US service sector from the coronavirus lockdown measures. (Event C on the chart.)

EUR/USD as of 2020-04-03

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