EUR/USD Exchange Rate Edges Higher as German Inflation Remains Steady in June
The Euro to US Dollar (EUR/USD) exchange rate rose by 0.2% today, with the pairing currently fluctuating around $1.182.
The Euro (EUR) rose today following the release of Germany’s harmonised index of consumer prices for June, which confirmed consensus and held at 0%.
In other Eurozone economic news, today saw the release of the French ILO unemployment figure for the second quarter, which fell below forecasts from 7.8% to 7.1%. As a result, EUR investors have become more optimist about France’s economic recovery in the coming months.
However, analysts at Reuters were more sceptical, commenting on data statistics from agency INSEE, they said:
‘French unemployment fell to a 37-year low in the second quarter, as a multi-year downtrend was exaggerated by a coronavirus lockdown that meant people couldn’t look for work.’
US Dollar (USD) Falls as Risk Sentiment Improves as US Joblessness Eases in July
The US Dollar (USD) struggled today as risk sentiment improved following a better-than-expected US continuing jobless claims report for July, which fell below forecasts from 16.09 million to 15.486 million.
Today also saw the publication of US initial jobless claims for August, which also fell below consensus from 1,191 thousand to 963 thousand.
Ryan Sweet, head of monetary policy research at Moody’s Analytics, commented on the data:
‘It’s clear that the pace of layoffs is beginning to moderate, but it’s still an enormous number of people filing for unemployment insurance benefits.’
‘One concern for both the job market and the broader economy is the lack of urgency in passing another round of fiscal stimulus. The economy needs more fiscal stimulus.’
As a result, investors have sought out riskier assets as the world’s largest economy continues to show improvement.
However, the US Dollar (USD) has benefited from growing fears over US-China trade relations, which appear to have taken a turn for the worse over the past week. Any further escalation between the world’s two largest economies could buoy demand for the safe haven ‘Greenback’.
EUR/USD Forecast: Could Weak Eurozone Growth Drag Down the Single Currency?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the flash Eurozone GDP figure for the second quarter. If the bloc enters a deeper recession than previously forecast, then we could see the EUR/USD exchange rate drop.
US Dollar (USD) traders will be paying close attention to the release of the US Michigan consumer sentiment index for August tomorrow. However, if this deteriorates, we would see the ‘Greenback’ benefit as risk sentiment is dampened.