EURUSD bounced from one-week lows registered earlier in the day below 1.18 but failed to initiate a broader recovery
US stocks rallied overnight and had their biggest daily gain since July despite uncertainty about the economic recovery and lack of agreement in Congress on a new economic aid package. The ADP report showed that the private sector added 428,000 jobs in August, less than half the 1 million expected by analysts. The S&P 500 rose 1,53%, the Dow Jones Industrial Average gained 1.6%, and the Nasdaq Composite added 1%.
Asian equities traded in a mixed manner on Thursday amid signs of rising tensions between the US and China. Washington imposed new restrictions on Chinese diplomats while China reported it was planning a sweeping set of new government policies to develop its domestic semiconductor industry and counter Trump administration restrictions. Also, China said it will take a necessary response to new US restrictions on Chinese diplomats. As a result, the Shanghai Composite Index shed 0.58%, the Nikkei 225 gained 0.93%, the Hang Seng in Hong Kong slipped 0.44% while the Kospi in Seoul advanced 1.3%.
In Europe, stocks opened in the green territory and extended gains despite fresh economic data pointed to a sluggish recovery in the region’s business activity. In particular, the IHS Markit Eurozone services PMI arrived at 50.5 in August versus 54.7 in July. In Italy and Spain, the PMIs returned to contraction last month. Eurozone July retail sales contracted by 1.3% versus +1.0% m/m expected.
EURUSD bounced from one-week lows registered earlier in the day below 1.18 but failed to initiate a broader recovery as the greenback remains on the offensive since the start of the week. The pair trimmed intraday losses to 1.1825 and stayed in the negative territory during the European hours ahead of US PMI data due later today. The common currency will likely remain under the selling pressure after the ECB officials expressed concerns over the rising euro that could hurt the economic recovery. On Friday, USD pairs will be affected by the key data on the US jobs market. As the ADP release showed yesterday, the figures could disappoint.