The EUR/USD rally accelerated today after strong retail sales and better services PMI from the European Union. The pair is trading at 1.2125, which is 14% above the year-to-date low of 1.0630.
European retail sales rose in October
In a report released earlier today, the Eurostat said that the volume of retail sales jumped by 1.5% in October as the region continued to recover from the pandemic. This monthly increase was better than the previous month’s decline of 1.7%.
The sales rose by an annualised rate of 4.3%, which also better than the previous month’s increase of 2.5%. Economists polled by Reuters were expecting the sales to jump by 2.7%.
Food and non-food products rose by 2.0% while automotive fuel fell by 3.7%. Among the best-performing countries were Denmark, Croatia, and France while the laggards were Slovenia, Slovakia, and Netherlands.
Still, analysts expect that sales declined in November as the number of Covid cases continued to rise in Europe. This led to many countries like France and Germany to implement light lockdowns to prevent the spread.
Services sector contracts
The EUR/USD also rose because of the better services PMI. As most analysts were expecting, the European services sector contracted in November as more non-essential businesses. These included companies like restaurants, cafes, and bars, which are leading employers in Europe.
According to Markit, the services purchasing managers index (PMI), declined to 41.7 in November, the lowest it has been since May. It was also the third consecutive month that the PMI has remained below 50, which is a sign of contraction in the industry.
The composite PMI, which combines the services
