Euro US Dollar (EUR/USD) Exchange Rate Wavers amid Dovish ECB Remarks
The Euro US Dollar (EUR/USD) exchange rate is wavering today, amid dovish comments from European Central Bank (ECB) policymaker Isabel Schnabel.
At the time of writing, EUR/USD is trading around US$1.0820, showing little movement from the mornings opening rates.
Euro (EUR) Rocked as ECB Signals No Further Rate Hikes
The Euro (EUR) is enduring rocky trade this morning, as an upward revision to the latest Eurozone services PMI battles dovish remarks from ECB Schnabel.
In October, activity in the bloc’s service sector recovered more than initially expected, printing at an upward revision of 47.8.
However, dovish comments from ECB Schnabel are undermining the common currency. In a speech, Schnabel stated that further interest rate hikes were unlikely.
Schnabel further elaborated that:
‘This is quite remarkable. The recent inflation print has given me more confidence that we will be able to come back to 2% no later than 2025. We must not declare victory over inflation prematurely. We are on track but we need to remain vigilant.’
US Dollar (USD) Calm as Markets Eye Afternoon Data
Quiet trade is striking the US Dollar (USD) this morning, as investors look ahead to the afternoon’s data releases.
The latest ISM services PMI is due for release, with economists expecting to see an expansion in sector activity in November. If the sector did manage to growth further, the ‘Greenback’ could strengthen amid continued economic resilience.
This would, in turn, likely spark renewed Federal Reserve interest rate hike bets, bringing additional tailwinds.
Any gains, however, may be limited or countered by the latest JOLTs job openings release, should it print as forecast. Markets are expecting a drop in the number of openings in October, with estimates pinning the figure at 9.3 million down from 9.553 million.
Francesco Pesole, FX Strategist at ING, commented:
‘The [JOLTs job openings release] probably holds the keys to a bigger market reaction, given the proximity to US payrolls data and the fact that markets are anxiously waiting for signs of a decisive turn lower in the jobs market to jump on bearish dollar positions.’
If this data prints in line with expectations, indications of slowing US employment could dent the ‘Greenback’ later today.
Euro US Dollar Exchange Rate Forecast: German Factory Data in Focus
Looking ahead for the Euro, tomorrow brings the release of the latest German factory orders data. In October, economists are expecting orders to have increased by 0.2% on a monthly basis, which could boost EUR.
This is then followed by the latest retail sales data for the Eurozone as a whole. Markets are anticipating an increase of 0.2%, which could bring cheer by signalling robust consumer spending in the bloc.
For the US Dollar, the latest ADP employment figures are due to release tomorrow afternoon. In November, employment is forecast to have increased to 130,000 from 113,000 on a monthly basis.
If this prints in line with forecasts, the indication of a tight labour market could strengthen USD, and prompt pared back rate cut bets.
However, any gains may be reversed on Thursday if jobless claims increase in line with market expectations.