EUR/USD Exchange Rate Rises as Italy Budget Dispute Settles
The Euro US Dollar (EUR/USD) exchange rate is up today, and trading in the region of $1.1396 after the Italian senate passed Rome’s budget of 2.04% after reducing it to avoid EU sanctions.
With no Eurozone data over the Christmas period, this news has eased Euro (EUR) traders’ concerns as a truce has developed between Italy and the EU.
The Euro (EUR) has also been steadied by receding news on UK Brexit uncertainty, with MPs in the House of Commons to return on 7 January to discuss Prime Minister Theresa May’s UK-EU withdrawal agreement.
The US Dollar (USD), meanwhile, held onto most of its gains yesterday after the Dow Jones Industrial Average skyrocketed over 1,000 points – its largest single-day point increase in history.
Stephen Innes, the Head of Asian Trading at Oanada, commented:
‘Investors are coming back to the U.S. markets after a build-up of lot of fear mongering . . . this would be supportive of the dollar as well as treasury yields and stocks.’
Euro US Dollar (EUR/USD) Exchange Rate Up as Brexit News Recedes
The Euro US Dollar exchange rate remained generally unmoved by the release of today’s European Central Bank bulletin, which revealed concerns over Brexit and increasing trade disputes continue to limit Euro sentiment.
Further concerns are mentioned over Italy’s ‘largest deviation from existing commitments’ to the Stability and Growth Pact (SGP), which may dampen market confidence in the single currency.
EUR was also weakened somewhat by the news that UK Prime Minister Theresa May announced a cutting of her Cabinet minister’s Christmas break to prepare for a possible no-deal Brexit, diminishing hopes that the UK will finalise a deal with the EU.
Tomorrow, meanwhile, will see the release of Germany’s inflation data, with the consumer inflation index for December expected to increase to 0.3% from last month’s 0.1%.
USD/EUR Exchange Rate Weakens ahead of US Labour Market Data
The US Dollar to Euro exchange rate may find some support from today’s data releases, with USD traders taking particular note of any increase in US consumer confidence figures.
Today will also see the release of the US Department of Labor’s continuing jobless claims which are expected to decrease, potentially providing a leg-up for the US Dollar.
These will be followed by the publication of initial jobless claims which are expected to increase.
Later on today will see the US new home sales figures for November which are expected to increase on last month’s 0.544M, potentially adding support to the USD/EUR exchange rate.
Tomorrow will see another raft of US data releases, with traders paying particular attention to the Chicago purchasing managers index figures for December, which is expected to decrease.
EUR/USD Outlook: Brexit and US-China Trade Relations to Remain in Focus
The EUR/USD exchange rate is likely to be driven by political factors rather than economic ones into the New Year, as markets close once again for the end of the year.
EUR investors will likely be paying attention to developments in the UK in January, when Brexit negotiations are expected to heat up again as Theresa May rallies to secure support for her deal.
USD traders, meanwhile, will be watching for any developments between the US and China, with markets remaining cautious as recent flare ups have challenged the 90-day trade ‘truce’ set in November.
Monday next week will see the release of the US manufacturing business indexes figures for December from the Federal Reserve Bank of Dallas.
These will be followed by a number of US data releases with the most significant being the ISM prices paid figures for December, with the USD/EUR exchange rate potentially finding a leg-up on any signs of an increase.
Wednesday next week, meanwhile, will see the publication of the Eurozone’s market manufacturing PMI, with the EUR/USD exchange rate possibly benefiting from an increase.
Thursday will see the printing of Eurozone’s market services PMI for December.
The Euro however, is likely to fluctuate on Friday with the release of the PPI figures for December, with any signs of bullishness potentially boosting the Euro against the US Dollar.
However, this will be followed by a raft of significant US labour stats, with any signs of an increase in the US average hourly earnings figures for December potentially weakening the EUR/USD exchange rate.