EUR/USD Exchange Rate Rangebound on US Thanksgiving
The Euro to US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.190.
The US Dollar (USD) held steady today as US markets are closed for Thanksgiving Day.
However, following this week’s news of a possible Covid-19 rollout in the next few weeks, demand for the safe-haven ‘Greenback’ has slipped.
Nevertheless, following yesterday’s release of the flash US GDP data for the third quarter, which remained low at 33.1% in annualized terms, concerns are growing over the world’s largest economy.
Goldman Sachs also slashed their growth forecast for the American economy, saying:
‘The public health and economic situation is likely to get worse before it gets better, in our view.’
Both the Covid-19 vaccine and US stimulus talks will continue to present the biggest near-term risks to the Federal Reserve’s outlook going ahead.
As a result, we could see demand quickly pick up for the US Dollar if the global economic outlook, too, begins to deteriorate.
Euro (EUR) Steady as German Consumer Confidence Falls
The Euro (EUR) held steady today despite the release of December’s Germany’s Consumer Confidence data, which fell below forecasts to -6.7.
Rolf Burkl, a consumer expert at GfK, commented on the data:
‘Though stores will remain open, the renewed shutdown of the hotel, restaurant and events industry — as well as the already struggling tourism industry — has had a serious impact on the consumer climate.
‘As a result, any hope we still had in early summer of a rapid recovery is now lost. Growing uncertainty has once again led to an increase in propensity to save, another factor which has contributed to the decline in the consumer climate.’
Meanwhile, with Germany – the Eurozone’s largest economy – appearing to struggle to shake off the Covid-19 crisis, EUR investors are becoming increasingly cautious.
French consumer confidence also worsened, falling to a 2-year low in December.
Nevertheless, EUR investors are becoming more hopeful now that Europe expects to see a rollout of the new Covid-19 vaccines in the months ahead.
Could an Improving Global Economic Outlook Drag Down the Safe-Haven ‘Greenback’?
Euro (EUR) traders are looking ahead to tomorrow’s release of the Eurozone’s Consumer Confidence data for November.
If this paints a dark outlook for the Eurozone’s economy, however, we could see the single currency fall.
Tomorrow will also see a speech from the German bank Deutsche Bundesbank’s President, Dr Jens Weidmann.
Any downbeat commentary about the Eurozone’s powerhouse economy would be EUR-negative.
Meanwhile, the US Dollar will continue to be driven by global risk sentiment.
The EUR/USD exchange rate could head higher, however, if demand for the safe-haven ‘Greenback’ continues to slip as the outlook for the global economy improves.