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05/06/24
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EUR Flat After Services in Germany Hits 12-Month Peak
On Wednesday, the euro was almost unchanged versus the US dollar and EUR/USD traded at about 1.0883, up 0.04% for the day in the North American session.
The services PMI for Germany for May was revised higher from the initial estimate of 53.9 to 54.2. This was higher than the market consensus of 53.9 and was the strongest growth rate in 12 months. Underlying demand improving helped drive business activity and business confidence rose to levels last seen in Feb. 2022.
The services PMI in the eurozone in May edged down to 53.2, after two consecutive readings of 53.3. This points to reasonable growth, which was bolstered by stronger job creation.
Business confidence also rose to levels last seen in Feb. 2022. The services sectors in both the eurozone and Germany have carried the economy, as the manufacturing sectors are still declining.
It is generally expected the ECB will on Thursday cut rates for the first time since 2019. The cut will likely be 0.25% which will take the deposit rate to 3.75%. It is not certain what will happen after that as inflation has been persistent and is currently at 2.6. The markets have priced in two cuts before the end of 2024.
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