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Euro US Dollar Exchange Rate Update: Gains for Euro Follow German Trade Surplus Expansion

  • EUR USD rises to 1.05 – USD EUR dip to 0.94 recorded
  • Euro strengthens as German trade surplus expands – Trump outbursts limit USD interest
  • French production figures due to rise Tuesday morning – Major US sales stats expected this Friday

The Euro cemented its status against the US Dollar during trading on Monday, having risen on the news that Germany’s trade balance for November has risen from 19.4bn to 22.6bn.

Other Eurozone news out on Monday was less supportive; the November unemployment rate remained static at 9.8%, while Spanish business confidence over December fell from 0.1 to -2.8.

In the US, a hawkish statement from Fed official Eric Rosengren has failed to boost the US Dollar against the Euro, while President-Elect Donald Trump has again courted controversy by failing to immediately freeze relations with Russia, having previously ‘acknowledged’ that Russian hackers did interfere with November’s US election.

(Last updated January 9th, 2017)

The main source of support the US Dollar this week is likely to be speeches from Federal Reserve officials, ahead of Friday’s main US data releases.

Euro US Dollar Exchange Rate Bolstered after Eurozone PMIs, Confidence and Inflation Figures

The previous week was a generally positive one for Euro US Dollar investors, though trading closed down for the Euro on Friday due to greater strength in the US.

Notable announcements included December’s Eurozone manufacturing PMI rising, a major drop coming for German unemployment in the same month, as well as a rise in preliminary German inflation for December.

Other Eurozone-wide news included rising inflation stats for December, along with a jump out of contraction for December’s Eurozone retail PMI.

Giving the Euro a favourable send-off on Friday morning were Eurozone confidence results for December covering a range of fields, all of which either rose or improved to set things up nicely for the Eurozone in 2017.

US Dollar Euro Rate Slide Shows Trump Turbulence is Here to Stay

Last week brought with it a progressive deterioration for the US Dollar Euro exchange rate, partly due to President-Elect Donald Trump showing that he had dropped none of 2016’s bad habits when it came to social media posts.

As well as singling out General Motors for making cars in Mexico and threatening them with ‘big border tax’, Trump also took aim at Toyota for the same reason. Promising that there was ‘much more to follow’ in this vein, Trump cemented a new environment of insecurity among US businesses for 2017, though the US Dollar still ended trading against the Euro on a strong footing.

This was due to optimism about when the next Fed interest rate hike would take place; despite the non-farm payrolls figure posting lower than expected, economists still remained hopeful that the Fed could hike the rate again as early as March due to Trump’s promise of a spending boom.

Rolled US Dollar bills

Future EUR USD Forecast: Potential for Euro Advantage on Greater Spread of Optimistic EZ Data

The coming week’s data releases appear to favour the Euro on the face of it, with high-impact US news being limited to Friday afternoon.

For Euro investors, data to watch out for will come first on Monday morning, when the Eurozone unemployment rate for November is to be announced. This may give the Euro a starting advantage against the US Dollar, as a rate drop from 9.8% to 9.7% is expected.

Moving further ahead to Thursday, Germany’s full-year GDP for 2016 is due, which has an optimistic rise from 1.7% to 1.9% anticipated.

The last big Eurozone news of the week is expected on Thursday afternoon, when the European Central Bank (ECB) monetary policy meeting accounts are due. These are set to show how the ECB perceived the Eurozone’s performance in December, as well as what measures might be needed for regulation in 2017.

In the US, as well as the cycle of Fed policymaker speeches starting up again next week, the highlight will be Friday afternoon’s December retail sales and January University of Michigan sentiment score being announced.

Sales are due to rise significantly from 0.1% to 0.7%, while the University’s expectation is for a preliminary confidence rise from 98.2 to 98.5.

Recent Interbank Exchange Rates

At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.05 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94.