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EUR/USD Exchange Rate Edges Higher Despite Weak French Industrial Output

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Euro to US Dollar Exchange Rate Rises as European Vaccination Production News Boosts Single Currency

The Euro to US Dollar exchange rate rose today, with the pairing currently fluctuating around $1.21.

The single currency rose against the US Dollar today despite French Industrial Output falling below consensus in December by -0.8%.

Charlotte de Montpellier, an economist at the ING, commented on the French data:

‘The production of machinery and capital goods is a smaller share of industrial production in France than in Germany or Italy. This implies that France benefits less from the economic recovery in China than its neighbours.

‘Moreover, production in France is strongly oriented towards the aeronautics sector, which is suffering much more during the pandemic. This being the case, the weakness of the construction sector (-10.9% since February) also indicates that the sectors oriented towards the domestic market are also suffering significantly.’

Meanwhile, German inflation confirmed forecasts today by rising 0.8% month-on-month.

However, EUR investors are confident about recent vaccine news after AstraZeneca and Germany’s IDT Biologika have combined in a vaccine production push.

Julia Kollewe, reporting for The Guardian, commented:

‘The two companies said they were exploring options to speed up this process in the April to June quarter to support Europe’s vaccine rollout, after a slow start to vaccination campaigns in EU countries amid supply shortages.’

As a result, Eurozone markets are now more hopeful that Europe’s Covid-19 vaccine rollout could speed up in the months ahead.

US Dollar Sinks as Risk-On Market Mood Limits Demand for Safe-Haven Currencies

The US Dollar suffered today as investors are seeking out riskier assets as global market mood as improved as more countries rollout Covid-19 vaccines.

In US economic news, meanwhile, the latest US Consumer Price Index fell below forecasts in January, with the month-on-month figure coming in flat at 0%.

Andrew Hunter, the Senior US Economist at Capital Economics, commented on US inflation data:

‘It isn’t a huge surprise that the recent virus-induced weakness in activity and employment appears to be weighing on inflation, but with virus cases now falling sharply and states starting to ease restrictions on activity, that weakness is unlikely to last for long.

‘In any case, as the big falls in prices last year drop out of the annual comparison inflation will pick up sharply in March and April.’

USD is also suffering from growing expectations for the $1.9 trillion Covid-19 stimulus plan.

With the programme progressing through Congress, global markets are becoming more confident for the future for the world’s largest economy.

EUR/USD Outlook: Could Risk-On Market Mood Further Weaken the US Dollar?

Euro traders will be awaiting tomorrow’s publication of the European Central Bank’s (ECB) Vice-President Luis De Guindos. Any downbeat comments about the Eurozone’s economy, however, would be EUR-negative.

US Dollar traders will be awaiting tomorrow’s publication of the latest US Initial Jobless Claims data for February. If these continue to rise, then we could see the US Dollar suffer.

The EUR/USD exchange rate could head higher, however, if demand for the safe-haven ‘Greenback’ continues to fall.