In the US, the manufacturing sector’s momentum remained muted in November. The Institute for Supply Management (ISM) reported that the US ISM Manufacturing PMI remained unchanged at 46.7, below market expectations. Additional data revealed a decline in the Manufacturing Employment Index and a rise in Prices Paid, indicating nuanced shifts in the manufacturing landscape.
Internationally, tensions escalated following an attack on an American warship and commercial vessels in the Red Sea, stoking fears of heightened conflict between Israel and Hamas. Such geopolitical uncertainties may enhance the safe-haven appeal of the USD against its global counterparts.
Meanwhile, in Europe, ECB policymaker and Bank of France Governor Francois Villeroy de Galhau commented last week on the ECB’s cautious stance on interest rates, with potential considerations for reductions later in 2024. Notably, a deceleration in inflation brings the ECB’s 2% inflation target back into focus, suggesting possible monetary policy adjustments.
Market watchers will closely follow upcoming events, including the German Trade Balance data for October and a speech by ECB President Christine Lagarde. These events are expected to provide further direction to the
EUR/USD pair.