UPDATE
The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.3% on Wednesday morning.
After European economic data produced yet more disappointing results on Wednesday morning, the shared currency declined versus its major peers. German Industrial Production saw 2.3% growth in the year in August; well below the median market projection of 3.3%. On a monthly basis, German Industrial Production contracted by -1.2%.
The US Dollar continues to hold a weak position versus its major peers after several disappointing ecostats continue to weigh on Federal Reserve interest rate hike bets. Although policymaker John Williams stood his ground in his assertions that the Fed will lift rates this year, it had minimal impact on trader optimism. Also weighing on demand for the US asset was an International Monetary Fund (IMF) report which cut global growth forecasts for the fourth-successive year. With a projected slowdown led by China, investors are concerned that it won’t be an environment in which the Fed is likely to move.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1236.
Yesterday…
EUR/USD Conversion Rate Predicted toTrend Narrowly on Negative Correlation
The Euro to US Dollar (EUR/USD) exchange rate strengthened by around 0.6% on Tuesday afternoon.
European economic data produced a mixed-bag of results, which has seen little by way of Euro volatility. However, the shared currency held gains versus many of its rivals thanks to negative correlation with the US Dollar. German Factory Orders in August saw 1.9% growth on the year, which was significantly below the median market projection of 5.6%. However, this was somewhat counteracted by September’s German Construction PMI which advanced from 50.3 to 52.4. In addition, September’s Eurozone Retail PMI ticked higher from 51.4 to 51.9. However, the German Retail PMI dropped from 54.7 to 54.0. The decidedly varied ecostats has seen subdued Euro trade as poor results are counterbalanced by positive reports.
In response to the German Retail PMI Markit economist Oliver Kolodseike stated; ‘German retailers reported further sales growth in September. Despite the rate of increase easing to a three-month low, the average reading for the third quarter was the best in almost nine years. Survey participants commented that increased tourism, good weather and the introduction of new products had boosted sales volumes. While sales targets were missed again and margins continued to be squeezed, retailers reported optimism towards the one-month outlook. Moreover, the fact that firms increased their buying activity in order to build stocks suggests that retailers expect further sales growth in coming months.’
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1263
USD/EUR Exchange Rate Forecast to Hold Losses on US Trade Balance Data
After a succession of disappointing economic reports, demand for the US asset has cooled of late. With particular reference to the dismal Non-Farm Payrolls print last week, many analysts have been forced to delay bets regarding the timing of a Federal Reserve benchmark interest rate hike. Economists fear that the Federal Open Market Committee (FOMC) will be reluctant to even consider a rate increase until labour market conditions have improved sufficiently. Domestic pressures aside, the FOMC will also want to avoid hiking rates until more is understood about China’s economic wellbeing and the true extent of the fallout from the Volkswagen scandal.
US Trade Balance showed the deficit widened in August from -$41.81 billion to -$48.33 billion. This caused the US Dollar to decline versus its major peers as yet more disappointing domestic data weighs on rate hawk optimism.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1171 during the early stages of Tuesday’s London session.
Euro to US Dollar (EUR/USD) Exchange Rate: Subdued Trade Forecast ahead of US Data
With so much uncertainty causing subdued and slow-paced trade, the Euro to US Dollar (EUR/USD) exchange rate is likely to see minimal volatility ahead of the US Trade Balance data. Wednesday ought to see greater EUR/USD movement with German Industrial Production and US Mortgage Applications data due for publication. US Consumer Credit may also provoke ‘Greenback’ volatility.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1274 during Tuesday’s European session.
