Euro Strong, Propelled by Domestic & US Macroeconomic Data

The euro was among the strongest currencies on the Forex market today, trading about flat against the Swiss franc and the Australian dollar, while rising versus other most-traded currencies. The currency got a boost from the recovery of the European services industries, though the weakness of the US dollar after an extremely disappointing employment report also helped the shared 19-nation currency.
July’s IHS Markit Eurozone PMI Services Business Activity Index was finalized at 54.7. While it missed market expectations and was below the preliminary figure of 55.1, it was far above June’s reading of 48.3 and the neutral 50.0 reading, meaning that the index was firmly in the expansionary territory. Furthermore, the IHS Markit Eurozone PMI Composite Output Index climbed from 48.5 to 54.9 — the highest level since June 2018. Looking at specific indices of the eurozone member countries, they also were at the highest levels in more than a year. Chris Williamson, Chief Business Economist at IHS Markit commented on the strong rebound of the service industry:

Eurozone service sector business activity rebounded in July to grow at a rate not exceeded for over two years. France and Germany enjoyed especially strong gains though renewed growth was also recorded in Spain and Italy as COVID-19 containment measures continued to be relaxed.

Combined with a surge in manufacturing production, the renewed expansion of the service sector bodes well for the economy to rebound in the third quarter after the unprecedented slump seen in the second quarter.

Eurostat reported that the seasonally adjusted volume of retail sales in the eurozone increased by 5.7% in June. It is a decent figure, though it missed the consensus forecast of a 6.5% increase. Furthermore, the report said that the sales returned to the pre-pandemic February levels.
EUR/USD gained from 1.1803 to 1.1865 as of 17:52 GMT today, reaching the high of 1.1905 intraday. EUR/CHF was at about 1.0772 after opening at 1.0776. EUR/JPY rallied from 124.76 to 125.27.
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