EUR/USD has maintained stability near the 1.1800 mark following the release of U.S. Purchasing Managers’ Index (PMI) data, which indicates continued expansion in the private sector’s business activities. The currency pair has struggled to follow through on Monday’s upside. It’s now bouncing around in a tight range as investors assess the economic impact of mixed signals and of course central bank policies.
The U.S. PMI data released earlier this week showed that business activity in the country expanded at a healthy pace in early September. The strong economic fundamentals continue to drive confidence in the market. Consequently, the EUR/USD currency pair has had a relatively calm trading environment, trading in a range around 1.1800. Traders are unwilling to get extraordinarily long the currency pair. It seriously falters trying to chart a course through the recent market turmoil.
Against a backdrop of central banks trying to stay on hold as much as possible, the chatter about EUR/USD going to parity has increased. Specifically, all eyes are on Federal Reserve Chairman Jerome Powell’s speech on September 8, which is expected to give additional guidance to traders. The GBP/USD pair has stabilized near 1.3500 ahead of Powell’s remarks, indicating broader market interest in central bank communications.
Gold prices are the other topic of discussion, now trading around $3,800. Trade analysts continue to scrutinize the relationship between commodity trends and currency fluctuations. In particular, they are interested in the effects of central banks remaining committed to their policy paths.
Meanwhile, BNP Paribas Securities Corp. is distributing a report about EUR/USD to U.S. persons, which may influence traders’ strategies and perceptions of the currency pair’s future performance.
France is entering into a new budgetary cycle. This one is shaping up to be every bit as complicated as the last. A number of other indicators, though, point to a healthier economic picture than we saw in advance of 2024. The productive sector, especially in aeronautics and agriculture, shows promise that is even seen in current growth rate figures.
“The French economy is entering a new budgetary cycle that is likely to be as complicated as the previous one. However, the economy appears to be more robust than in 2024.”
Uncertain political times ahead, France is on a roll economically. Key strengths—creative business formation, a dynamic job market, a current account in harmony with domestic saving, strong pass-through of European Central Bank (ECB) monetary easing, and a lift in private capital spending—all feed into this positive outlook.
In May, the French economy was basking in the glory of a near-record wheat harvest. Then, beginning in June, production of aeronautics shot up. In Q2, hiring and net job creation recovered dramatically. This wave of hiring returns some much-needed confidence to the labor market and reflects a rebound in broader economic activity.
Business creations in France have skyrocketed, reflecting an energetic and dynamic entrepreneurship ecosystem that has the potential to attract even more youth and fuel even more economic growth.
Still, challenges remain. Our analysts stress the importance of a budgetary process that results in ongoing, real-world consolidation. France plans to reach a structural deficit of 3% of GDP by the end of the decade. This third goal is critical to realizing the full range of economic benefits possible, and in preparing for future challenges.
“All estimates and opinions included in this report constitute our judgements as of the date of this report.” – BNP Paribas