Euro: Dollar strengthens against EUR after hot US PMIs – Danske Bank
Danske Bank’s Danske Research Team notes that strong US PMIs and hawkish Federal Reserve pricing weighed on EUR/USD. The composite PMI rose sharply, driving expectations for another Fed rate hike in October and pulling EUR/USD below 1.14.
Danske Bank's research team highlights the strengthening of the US dollar against the Euro due to strong US PMIs and hawkish Federal Reserve pricing. The composite PMI rose sharply in September, reaching 53.1, the highest level in over three years, driven by a surge in services input prices. This has led to expectations of another Fed rate hike in October, causing EUR/USD to fall below 1.14.
The euro area's strong PMI surprised market expectations, while services contributed to the growth. With growth and inflation pointing in the same direction, the European Central Bank's outlook appears hawkish, prompting short-term rate increases. In the US, the flash PMIs also exceeded expectations, with the composite rising to 58.4 in September, signaling a tightening of financial conditions. This hawkish sentiment pulled EUR/USD below 1.14, with a 70% chance of another Fed hike by October.
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