EUR/USD Exchange Rate Rangebound as US Economy Struggles
The Euro to US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.179.
The US Dollar (USD) held steady against the Euro (EUR) today after the flash US Gross Domestic Product figure for the second quarter fell to record lows of -32.9%. As a result, ‘Greenback’ investors have become increasingly pessimistic about America’s economic recovery from the coronavirus crisis.
The White House’s Council Economic Advisers said in their statement:
‘The magnitude of this contraction reflects the gravity of the economic sacrifice Americans made to slow the spread of COVID-19 and prevent greater tragic loss of life and health. The country mitigated pressures on hospital capacity and allowed medical professionals the time to learn how to more effectively treat this disease. The Trump Administration will continue to support America as we build a bridge to the other side of this crisis.’
Meanwhile, today’s release of the latest US Continuing Jobless Claims left many US Dollar (USD) investors feeling jittery about the economy. The figure rose unexpectedly to 17.018 million.
Following yesterday’s dovish statement from the Federal Reserve, many USD investors are remaining cautious as the outlook for the American economy remains grim.
Euro (EUR) Steady as German GDP Figure Undershoots Forecasts in Second Quarter
The Euro (EUR) failed to gain on the US Dollar (USD) today after Germany’s flash GDP figure for the second quarter fell to a worse-than-expected -10.1%. As a result, EUR investors have become increasingly pessimistic about the Eurozone’s powerhouse economy.
DekaBank economist Andreas Scheuerle commented on the data:
‘Now it’s official, it’s the recession of a century. What has so far been impossible to achieve with stock market crashes or oil price shocks was achieved by a 160-nanometre tiny creature named coronavirus.’
Today also saw Germany’s Harmonised Index of Consumer Prices fall by -0.5% in July.
Analysts at Reuters commented:
‘German annual inflation came to a standstill in July due to the coronavirus pandemic, posting its weakest reading in more than four years.’
However, the EUR/USD exchange rate has stabilised as both the US economy and the Eurozone’s are struggling from the coronavirus pandemic.
EUR/USD Outlook: Could US-China Trade Tensions Buoy Safe-Haven Demand for the ‘Greenback’?
Euro (EUR) investors will be awaiting tomorrow’s release of the Eurozone’s flash GDP figure for the second quarter. However, if this falls below consensus, then we could see the single currency suffer.
Tomorrow will also see the release of the latest German retail sales figures for June. If this confirms consensus and falls by -3.3% we could see the EUR/USD exchange rate fall.
US Dollar (USD) investors, meanwhile, will be paying close attention to tomorrow’s publication of the US Michigan Consumer Sentiment Index for July. Any signs of improvement would buoy the ‘Greenback’.
The EUR/USD exchange rate could fall, however, if US-China trade tensions continue to intensify. As a result, we would see the US Dollar benefit from its safe-haven status as the global economy struggles from growing uncertainty.