Weak Eurozone Industrial Production sets Euro (EUR) on a Downtrend Today
Sentiment towards the common currency (EUR) continued to dip on Thursday morning after a weaker than expected Eurozone Industrial Production figure for August. Thus, although the ‘Greenback’ (USD) was offered little support by the publication of the Fed’s Beige Book, the EUR/USD exchange rate was on a downtrend in the region of 1.1434.
A sliding Chinese Consumer Price Index has kept the EUR/USD exchange rate strong this morning as the common currency (EUR) benefits from risk aversion.
Euro (EUR) Bolstered in spite of Weak Eurozone Economic Sentiment, ‘Greenback’ (USD) Retreated on Policymaker Dovishness
While Tuesday’s finalised German Consumer Price Index offered no surprises, giving some support to a relatively buoyant Euro (EUR), the October ZEW Economic Surveys proved decidedly more dovish. Particularly notable was the Economic Sentiment Index, which slipped from 12.1 to 1.9 on the month, to indicate the severity of the impact caused by the ongoing Volkswagen emissions scandal and negative global headwinds. Nevertheless, as Chinese economic data had printed poorly the single currency was held up by its safe-haven status amidst a fresh round of market risk aversion.
Although the ‘Buck’ (USD) also benefitted from cautious traders moving away from higher-risk assets the EUR/USD exchange rate remained on a general uptrend throughout the day. Sentiment towards the US Dollar took a further blow in the afternoon after comments from St. Louis Federal Reserve President James Bullard. One of the hawks on the Federal Open Market Committee (FOMC) who had been in support of a September interest rate hike, Bullard was, however, more dovish in tone as he expressed doubts that a 2015 rate rise was still feasible.
Chinese Slowdown Concerns Buoy EUR/USD Conversion Rate ahead of Today’s Eurozone Industrial Production Data
Wednesday morning has seen the EUR/USD pairing continue to make gains ahead of August’s Eurozone Industrial Production figure, even though pundits are forecasting a slight decline in growth. Further weak data from China, as the national Consumer Price Index defied expectations and printed at its lowest level in nine years at 1.6%, has seen more investors buying into the safe-haven. With the odds of an imminent Fed interest rate increase seeming to recede further, the EUR/USD exchange rate has climbed to a three-week best of 1.1425 this morning.
EUR/USD Exchange Rate Forecast: US Advance Retail Sales Likely to Produce ‘Greenback’ Volatility
A rally could be in store for the US Dollar this afternoon, however, with the publication of the September Advance Retail Sales reading. Domestic consumer demand is expected to hold steady at an increase of 0.2% on the month, should the figure ultimately print at this level or even above it then markets could well be reassured as to the robustness of the world’s largest economy.
Eurozone data will be slightly thinner on the ground through the rest of the week, with the finalised Eurozone Consumer Price Index for September the only major release of note ahead of the weekend. This is likely to provoke little volatility for the EUR/USD currency pair, with movement more likely to be caused by other US figures, including the latest University of Michigan Confidence Index.
Current EUR, USD Exchange Rates
At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was trending positive in the range of 1.1413, while the US Dollar to Euro (USD/EUR) pairing was on a downtrend in the region of 0.8760.