It is clear that the current main topic is the so-called second wave of COVID-19 pandemic, which either has already begun in Europe, or is about to begin. This is the reason why the European currencies actively declined from the very beginning of this week. But yesterday, there was no new information on this topic. In this case, it seems logical to conclude that the market should remain in place. If you look at the pound, this is exactly the case. However, if we carefully analyze, it becomes clear that the market still considered the macroeconomic statistics.
Yesterday, the single European currency declined, but not as much during the previous days. This is due to weak data on business activity indices, although we are talking only about preliminary data. So, the only thing that could please is the index of business activity in the manufacturing sector of the euro area. Its growth was predicted from 51.7 to 52.0, but it rose to 53.7. But at the same time, the index of business activity in the service sector fell from 50.5 to 47.6. And not only did it fall below the 50-point mark that separates growth from stagnation, but it was also expected to grow to 50.9. In general, all this led to the fact that the composite index of business activity declined from 51.9 to 50.1.
Composite PMI (Europe):
The UK also recorded a decline in business activity indices, but the data came out better than forecasted. So, the index of business activity in the manufacturing sector, which was supposed to decline from 55.2 to 53.8, declined only to 54.3. The index of business activity in the service sector declined from 58.8 to 55.1 which was expected. Moreover, the composite PMI fell by only just 55.7, instead of 54.9. It is also important that there were fears that the data would turn out to be significantly worse than forecasts due to the epidemiological situation in the UK and the restrictive measures taken. Nevertheless, everything turned out to be a little different.
Composite PMI (UK):
Finally, the preliminary data on business activity indexes in the United States is being put in their place. As in the UK, they were slightly better than forecasted. So, the index of business activity in the manufacturing sector is expected to fall from 53.1 to 53.0, but it rose to 53.5 instead. Meanwhile, in the service sector, it was forecasted to decline from 55.0 to 54.1, but it only fell to 54.6. The composite PMI also declined from 54.6 to 54.4 only, rather than 53.0 as expected. As we can see, the data from the UK and US came out better than forecasted, but it was worse in Europe.
Composite PMI (United States):
Thus, it is quite logical that the market will focus on macroeconomic statistics today, unless, of course, there are regular reports about the coronavirus. And most likely, the result will further strengthen the dollar. After all, the United States is expected to see a further recovery in the labor market. In particular, the number of initial applications for unemployment benefits may decline from 860 thousand to 840 thousand, while the number of repeated applications should decline from 12,628 thousand to 12,100 thousand. So the labor market is gradually recovering, and the economy will recover along with it.
Repetitive Unemployment Insurance Claims (United States):
The EUR/USD pair continued to focus on the decline, reaching the level of 1.1650 after breaking through the lower limit of the side channel 1.1700/1.1900. Thus, we can assume that if the price is consolidated below 1.1650, the way will open in the direction of the level of 1.1550. Otherwise, the gap between the values of 1.1650/1.1700 will remain.
The GBP/USD pair broke the local low (1.2763) on September 11, as a result of which new ranges were opened for sellers. If the price is kept below 1.2770, a further decline in the direction of 1.2600 can be considered.