EUR rallies amid prospect of softer Trump trade tariffs and 'buoyant' PMIs

Matthew Ryan, CFA Ebury

The euro has had a very good week so far, with common currency briefly rallying above the 1.05 level this morning.

The prospect of a softer stance towards trade protectionism from President Trump is a clear bullish signal for the euro given the common bloc’s high dependence on external demand (the export to GDP ratio is above 50%), particularly from the US and China.

A more buoyant set of business activity PMI figures has provided the euro with a fresh leg up.

The flash composite index from S&P jumped back above the level of 50 for the first time August in January (50.2). This follows a surprise to the upside in the manufacturing sector (46.1 vs. 45.3) and a modest miss in the services index (51.4 vs. 51.6).”

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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