US Dollar (USD) Trends Higher Today ahead of Non-Farm Payrolls, Euro (EUR) Weakens as German Industrial Production Falters
As the Shanghai Composite Index closed up this morning the Euro (EUR) has lost some of its recent bullishness, with safe-haven demand somewhat eased. While Germany’s Trade Balance showed a more limited narrowing of the trade surplus confidence in the single currency has been dented by weaker German Industrial Production. The US Dollar (USD), meanwhile, has been strengthening ahead of the day’s Non-Farm Payrolls, shored up by the prospect of a solid figure. Consequently, the Euro to US Dollar (EUR/USD) exchange rate was slumped in the region of 1.0870.
US Jobless Claims Data Falls Short of Forecast to keep EUR/USD Exchange Rate Trending Higher
After both US Initial and Continuing Jobless Claims failed to fall as forecast in the last week the Euro (EUR) has remained dominant over the US Dollar (USD) on Thursday afternoon. While Chinese authorities have announced the suspension of the circuit breaker mechanism that saw local stock markets closed prematurely this morning, risk aversion has continued to bolster both safe-haven currencies. As such, the EUR/USD exchange rate remains on an uptrend around 1.0854.
With stock markets seeing another day of weakness in the wake of fresh Chinese volatility the Euro to US Dollar (EUR/USD) exchange rate has been making some strong gains today.
EUR/USD Exchange Rate Trended Higher as Eurozone Growth Hit Four-and-a-Half Year High
With weaker-than-expected Chinese Services PMI prompting another day of safe-haven demand amid sliding stock prices and commodity softness, both the Euro (EUR) and the US Dollar (USD) were generally shored up against rivals. As Eurozone Composite PMI revealed that the currency union had experienced its strongest growth in four-and-a-half years at the end of 2015, having risen to 54.3, the single currency was prompted onto a stronger bullish run. This was in spite of concerns over weak inflationary pressure and the increased likelihood of the European Central Bank (ECB) opting to loosen monetary policy further in coming months.
Demand for the ‘Greenback’ was dented on Wednesday afternoon, meanwhile, as the latest ISM Non-Manufacturing Composite showed that growth had unexpectedly faltered. Slipping from 55.9 to 55.3 this did little to allay concerns that the world’s largest economy was beginning to slow, although this more disappointing figure was somewhat offset by a stronger ADP Employment Change report.
Euro (EUR) on Bullish Form as Eurozone Unemployment Rate Falls, Stock Market Rout Extends Today
Overnight the minutes of the Federal Open Market Committee’s (FOMC) December meeting were published, revealing that the central bank’s first interest rate hike had been a ‘close call’ for some policymakers. Suggesting that the next move on monetary policy may not be as soon as previously thought, this prevented the US Dollar from advancing against the Euro. While the ‘Greenback’ was bolstered afresh as another 7% drop in prices saw Chinese stock markets automatically closed after just thirty minutes of trading, the EUR/USD exchange rate has nevertheless remained on an uptrend.
Although German Retail Sales were not as strong as forecast this morning the common currency has continued to make solid gains against the majors, bolstered by a sharp increase in the Factory Orders and Retail PMI of the Eurozone’s powerhouse economy. A surprise fall in the Eurozone Unemployment Rate has also seen the appeal of the common currency strengthened today, mitigating some concerns over the impact that negative global headwinds will have on the domestic economy.
EUR/USD Exchange Rate Forecast: US Dollar Predicted to Rally with Stronger Non-Farm Payrolls
Should the week be capped off by another day of stock market volatility the Euro and US Dollar are likely to stay on stronger form as a general atmosphere of risk aversion persists. While a stronger German Industrial Production figure is predicted to shore up the single currency further traders may be discouraged if the domestic Trade Balance shows a narrowed trade surplus.
However, a stronger Non-Farm Payrolls report may prompt pundits to favour the ‘Greenback’ ahead of the weekend, particularly if the number of new jobs added to the US economy is found to be in line with the more bullish ADP Employment Change figure.
Current EUR, USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR/USD) exchange rate was making gains around 1.0839, while the US Dollar to Euro (USD/EUR) pairing was slumped in the range of 0.9223.