EUR/USD Trades Near 1.16 as European Yields Continue to Climb

The EUR/USD currency pair is trading around the 1.16 level as European government bond yields continue to rise. This has created a backdrop for the pair, with ten-year German yields up about 50 basis points since early July and US Treasuries having risen nearly 40 basis points.

German yields have climbed significantly, with the curve steepening between two- and ten-year bonds. The two-year German bond has increased by 40 basis points, while the ten-year bond has seen a rise of 50 basis points since early July. In contrast, US Treasuries have also risen, but at a slower pace.

The final euro area service and composite PMIs for August will be released today, with Danske Bank expecting confirmation of the flash release. The flash services PMI was unchanged at 51.7, still above expectations. Meanwhile, in the US, the final services PMIs for August show a solid rebound, with output charge inflation easing to a six-month low.

The ADP private payrolls increased by 38k in August, falling short of the expected 48k. Sector details were mixed, with education and health services showing higher growth than in July, while manufacturing declined by 17k.