EUR/USD: Worse than expected PMI to place renewed downward pressure on the euro – MUFG

The EUR/USD pair stays relatively quiet as investors await October PMI figures. If the data fails to meet market expectations, the common currency could suffer renewed downside pressure, economists at MUFG Bank report.

Key data release ahead of ECB next week

“Given the auto sector continues to suffer, the risks are to the downside for manufacturing in Germany and the eurozone.” 

“Worse than expected PMI data today would certainly reinforce Lagarde’s position in arguing at the ECB press conference next week that inflation will prove transitory and that the energy price spike is contractionary.” 

“It could help prompt some retracement in the rates market that looks excessively priced for a rate hike next year. That will place renewed downward pressure on the euro.”