Euro US Dollar (EUR/USD) Exchange Rate Rocky amid Dismal Eurozone Industrial Data
The Euro US Dollar (EUR/USD) exchange rate saw volatile trade on Wednesday, following downbeat Eurozone industrial data.
At the time of writing, EUR/USD was trading at around US$1.0859, a fall of just under 0.2% from the morning’s opening rates.
Euro (EUR) Dented by Downbeat Industrial Production Data
The Euro (EUR) endured selling pressure during Wednesday’s session, amid weak industrial production.
Industrial production levels in the Eurozone were found to have contracted by 1.1% in September. This reflected a sharp decline from August’s 0.6% increase, and was beyond the 1% contraction anticipated by markets.
This further weighed on the Euro by darkening the bloc’s economic outlook. Economists are now expected an imminent recession in the Eurozone.
Mateusz Urba, Senior Economist at Oxford Economics, commented:
‘With surveys pointing to weak orders amid destocking and little signs of consumers coming to the rescue, we think that eurozone GDP will stagnate or even contract again over Q4. Growth is set to pick-up over 2024, although we expect sequential growth rates to remain below potential.’
Additionally, the market mood served to undermine the safer currency. While there were patches of sombre trade, the preference amongst investors appeared to be for more risk-sensitive assets, which left the common currency sidelined.
US Dollar (USD) Rocky amid Mixed Data Set
The US Dollar (USD) saw volatile trade over Wednesday, amid a mixed slate of economic data. In October, producer price inflation cooled beyond forecasts.
This served to undermine the US Dollar, as PPI often filters through into consumer inflation levels. In October, PPI cooled by -0.5%, significantly below expectations of a 0.1% increase.
However, this was offset by better-than-expected retail sales data. While retail sales softened for the first time in eight months in October, they were not substantial enough to reverse the prior strength of US consumer spending.
Although, the data indicates that consumers may be feeling the pinch from the Federal Reserve’s aggressive tightening cycle. Big ticket purchases, such as cars, were down significantly from the previous month, contributing to the dip.
Elsewhere, the market mood remained in flux over the course of the session. As such, the safe haven ‘Greenback’ may have seen its gains limited in scope.
Euro US Dollar Exchange Rate Forecast: Central Bank Speeches in Focus
Looking ahead for the Euro, the core catalyst of movement is likely to come tomorrow. Then, European Central Bank (ECB) President Christine Lagarde is due to deliver a speech.
As recent ECB communications have leant more dovish, another cautious speech could weaken the common currency. However, if she strikes a hawkish angle the Euro could rally.
For the US Dollar, the latest initial jobless claims figures are due for release tomorrow. Economists forecast claims to have increased to 220,000 in the week ending November 14th, which could dent USD by suggesting slowdown in the labour market.
Additionally, a score of Federal Reserve policymakers are due to speak over Thursday’s session. If they present a unified, hawkish stance the US Dollar could strengthen.