EUR/USD Exchange Rate Falls Despite Stronger-Than-Expected German Growth Data
The Euro to US Dollar (EUR/USD) exchange rate dipped today, with the pairing fluctuating around $1.182 at the time of writing.
The Euro (EUR) shed some of yesterday’s gains following the stronger-than-expected German GDP data for the second quarter.
President Clemens Fuest was optimistic about the release, saying that the ‘German economy is on the road to recovery’.
However, today saw the single currency begin to falter against the ‘Greenback’ due to growing fears over the spread of Covid-19 throughout Europe.
As a result, this has dampened confidence in EUR as worries for the Eurozone’s economy are escalating.
In Eurozone economic news, today saw the release of the French consumer confidence figure for August, which held steady at 94.
Analysts at Reuters commented on the data:
‘France has avoided a major spike in permanent unemployment as companies put workers on state-subsidised furloughs en masse.’
‘While households’ general economic outlook was stable, it remained far below the survey’s long-term average. The number of people who said it was a good time to save money rose while those prepared to make big purchases fell.’
US Dollar (USD) Edges Higher Despite Slump in Safe-Haven Demand on US-China Trade Deal Hopes
The US Dollar (USD) edged higher today despite rising hopes of a US-China trade deal dragging down demand for the safe-haven ‘Greenback’. This follows Washington’s and Beijing’s agreement to honour the Phase One trade agreement.
In US economic news, today saw the release of July’s durable goods orders figures beat forecasts and rise from 7.7% to 11.2%. Consequently, this has clipped some of the US Dollar’s gains as hopes continue to grow for the world economy’s slow recovery from the coronavirus crisis.
Reade Pickert, an analyst at Bloomberg, said:
‘U.S. orders for durable goods rose in July by more than double estimates amid a continued surge in automobile demand, indicating factories will help support the economic rebound in coming months.’
Kansas City Federal Reserve President Esther George was also optimism about the US economy, saying, ‘I think my forecast is the economy will continue to grow, given the right supports. And so that’s what I’m looking forward to.’
EUR/USD Forecast: Could Improving Confidence in the Eurozone’s Economy Buoy the Single Currency?
US Dollar (USD) investors will be looking ahead to tomorrow’s release of the flash US GDP figure for the second quarter. If this falls by -32.5% as forecast, then we could see safe-haven demand for the ‘Greenback’ increase as concerns grow over the world’s largest economy.
Tomorrow will also see a speech by the Federal Reserve’s Chairman, Jerome Powell. Any dovishness about the US economy could, however, further boost safe-haven demand for USD.
Eurozone economic data is short in supply on Thursday, but EUR investors will be eyeing tomorrow’s release of August’s French business climate in manufacturing gauge. Any improvement would boost the EUR/USD exchange rate.