EUR/USD climbs to 1.0705 following worse than expected US manufacturing data

Recently, Bundesbank President and European Central Bank (ECB) member Joachim Nagel stated that the ECB must be convinced that inflation heads to its 2% goal before cutting rates. This is because most ECB policymakers have opened the door to easing policy due to the slowdown in inflation.

Aside from this, data from the United States (US), revealed by S&P Global on Tuesday, showed that business activity in the manufacturing sector shrank. The Manufacturing PMI slipped from 51.9 to 49.9 this month. On the other hand, the Services and Composite Index decelerated from 51.7 and 52.1 to 50.9, in both readings.

Other data showed that New Home Sales jumped to a six-month high, according to the US Department of Commerce, while Building Permits remained in contractionary territory despite being revised up from -4.3% to -3.7%.

In the meantime, the US economy continues to outperform its peers amid 525 basis points of rate hikes by the Fed since March 2022. Next week, the Fed will meet, and interest rates are expected to remain unchanged. Last week, the Fed parade witnessed policymakers pushing against three rate cuts, with most officials expecting just two or one.

Across the pond, Eurozone HCOB PMIs were solid, with the composite index rising from March’s 50.3 to 51.4 this month, while the services edged up from 51.5 to 52.9. the outlier was the Manufacturing PMI, slipping from 46.1 to 45.6