US Dollar (USD) Trends Higher Today as Chinese Economy Continues to Slow
After a poor Chinese Services PMI and the announcement of an apparent hydrogen bomb test in North Korea the US Dollar (USD) has continued to strengthen. Sentiment towards the Euro (EUR), meanwhile, has remained largely bearish ahead of the latest Eurozone Services PMIs, as the case for further European Central Bank (ECB) loosening appears to be building. As a result, the Euro to US Dollar (EUR/USD) exchange rate is trending lower at 1.0735.
Strong Business Conditions Survey Bolsters Demand for US Dollar, EUR/USD Exchange Rate Slumps
Bettering expectations the ISM New York Index rose from 60.7 to 62, indicating that business conditions in the region were still strong. As a result the ‘Greenback’ (USD) has been on bullish form towards the end of Tuesday’s European session, pushing the EUR/USD exchange rate into a severe slump at 1.0740.
Despite the US economy showing signs of contraction yesterday the Euro to US Dollar (EUR/USD) exchange rate has begun Tuesday on a downtrend.
Solid Eurozone Manufacturing PMIs Fail to Bolster Euro (EUR) after German Inflation Disappoints Forecast
A generally stronger-than-expected raft of Eurozone Manufacturing PMIs helped to shore up the Euro (EUR) yesterday morning, as all members of the currency union demonstrated sector expansion for the first time in twenty months. While French manufacturing did slow somewhat an unexpectedly solid performance from Greece saw the overall Eurozone measure continue to edge higher. Increased safe-haven demand also added to the appeal of the single currency on Monday, benefitting as a result of stock market volatility in China that conversely dented the US Dollar (USD).
However, the EUR/USD exchange rate ultimately erased the day’s gains after the latest German Consumer Price Index printed at a lower level than anticipated. With inflationary pressure failing to build in the Eurozone’s powerhouse economy this naturally led to further suggestions that the European Central Bank (ECB) will step up its monetary loosening measures in the coming months. Thus, in spite of the ISM Manufacturing Survey revealing that US production had continued to contract at the end of 2015, the common currency was unable to advance against the ‘Greenback’.
Eurozone Inflation Holds Steady to Raise Odds of More Imminent ECB Easing Measures, EUR/USD Exchange Rate Trends Lower
With markets having generally rallied overnight, following intervention from the People’s Bank of China (PBOC), the Euro has remained in more muted spirits this morning. Although the December German Unemployment Change bettered expectations to show that the number of unemployed within the nation had decreased by 14,000 this has not been enough to boost demand for the softened currency. Conversely the US Dollar has been on a stronger uptrend, with traders piling back into the ‘Buck’ as global slowdown concerns temporarily retreat.
As the Eurozone inflation rate remained unchanged on the year in December the Euro has slumped further today with the increasing likelihood of imminent ECB easing.
EUR/USD Exchange Rate Forecast: FOMC Meeting Minutes to Prompt Fresh US Dollar Volatility
This afternoon’s ISM New York Index may erode some support for the ‘Greenback’ if it confirms expectations of sustained slowing within the local business sector. However, should activity have risen further into expansion territory the EUR/USD exchange rate is likely to see some fresh gains.
US Dollar volatility should also be expected on Wednesday with the publication of the latest Non-Manufacturing Composite Index and the minutes of the Federal Open Market Committee’s (FOMC) December meeting. If policymakers are shown to have been generally more hawkish during deliberations preceding the central bank’s landmark interest rate hike demand for the ‘Greenback’ could be heightened.
Current EUR, USD Exchange Rates
At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was slumped in the region of 1.0776, while the US Dollar to Euro (USD/EUR) pairing was climbing around 0.9276.