EUR/USD Rises on Strong Eurozone PMI and US Dollar Weakness

The EUR/USD exchange rate has seen an increase due to broad US Dollar weakness and stronger-than-expected Eurozone economic activity. The August Purchasing Managers' Index (PMI) data showed a nine-month high, driven by manufacturing.

According to Brown Brothers Harriman's Elias Haddad, the composite PMI reached 52.1, surpassing consensus expectations of 51.7 and previous month's reading of 52.0. This reflects a solid acceleration in manufacturing activity, while services activity remained unchanged from July.

The swaps curve has virtually fully priced in a 25bps European Central Bank (ECB) rate hike to 2.50% at the next September 10 meeting and a total of 60bps of tightening over the next twelve months.