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Eurodollar forex market falls back to 1.10s as European PMIs deteriorate

Euro PM indicators worsened across the board, leading to a sell-off in the euro.

French manufacturing PMI 44.5 (forecast 46.0)
French non-manufacturing PMI 47.4 (48.5 expected)

German Manufacturing PMI 38.8 (41.0 expected)
German services PMI 52.2 (53.1 expected)

European manufacturing 42.7 (43.5 expected)
European non-manufacturing 51.1 (forecast 51.6)

In response to these figures, the Eurodollar price temporarily fell to around 1.1066, but has since recovered to around 1.1092. The dollar/yen exchange rate is also likely to adjust slightly. Speculation is mixed ahead of this Friday’s BoJ policy meeting. The USD/JPY exchange rate rose last Friday on the assumption of no policy change, but some reports raised the inflation forecast for 2023 to around 2.5%, which sent the USD/JPY exchange rate below 141 yen on expectations of a policy change.

The market wants to take it easy before the big events after Wednesday’s FOMC meeting.