EUR/USD Exchange Rate Down after ECB Cuts Eurozone Growth Figures
The Euro US Dollar (EUR/USD) exchange rate is down around 0.3% this afternoon, and is currently trading at $1.1344 after the President of the European Central Bank (ECB), Mario Draghi, announced lower Eurozone growth figures in today’s ECB Monetary press conference.
This was followed by the news that the ECB was ending its quantitative easing (QE) programme after nearly four years, despite a slowing Eurozone economy.
Meanwhile the US Dollar (USD) was strengthened on reports that China will revise its ‘Made in China 2025’ project, further soothing trade tensions after yesterday’s announcement that China would also cut US car import tariffs.
However, Wilbur Ross, the US Commerce Secretary, remained sceptical, saying:
‘You’ll find they haven’t been talking that much about it. That doesn’t mean they’ve dropped it. . . They clearly are going to move up the technology value-added spectrum.’
EUR/USD Exchange Rate Dips as Eurozone’s Quantitative Easing is Halted after Four Years
The Euro (EUR) was left generally unmoved as the ECB kept interest rates unchanged, as was expected, however with the ECB’s announcement that QE would be halted in December even as the Eurozone shows signs of slowing down, confidence in EUR fell sharply.
EUR, however, found some strength from today’s announcement that Italy’s Prime Minister Giuseppe Conte had agreed to reduce his controversial budget deficit for next year.
This was followed by EC President Jean-Claude Juncker commenting that he felt the response ‘positive’ after the EC deemed Conte’s proposed target of 2.04% as – in Juncker’s words – ‘significant’.
‘We have recovered some financial resources, we have been very prudent. . . And we are now using these financial resources for this negotiation.’
Today also saw the release of Germany’s consumer price index for November, which remained static at 0.1%.
US Dollar Euro (USD/EUR) Exchange Rate Rises as Initial Jobless Claims Decrease
The US Dollar (USD) was bolstered by Wednesday’s release of the consumer price index for November, which showed an increase of 2.2% against last month’s 2.1%.
USD was strengthened today by the release of the initial jobless claims for December showing a better-than-expected decrease.
However these gains were tempered by the release of continuing jobless claims figures which showed an increase at a bearish 1.661M against last month’s 1.636M.
Later on today will see the release of November’s monthly budget statement which is expected to increase.
Tomorrow, meanwhile, will see a raft of US data releases, with the most notable being retail sales figures for November, which are expected to decrease, likely further dampening confidence in the US economy.
EUR/USD Outlook: Italy Budget Remains in Focus
The EUR/USD exchange rate is likely to be driven by political forces in the coming week, with EUR investors paying close attention to any developments from Italy on its budget deficit, with markets looking to see whether Prime Minister Conte will carry through with his commitment to a possible budget cut to 2.04%.
Tomorrow will see a slew of Eurozone data releases, with the most notable being the Markit PMIs for December, which are expected to increase.
Also, tomorrow will see the release of the Q3 labour cost figures, which are regarded as an indicator of inflation.
USD investors will also be keeping a close eye on the release of tomorrows US manufacturing PMI figures, which are expected to increase likely providing a bit of upward lift to USD.