EUR/USD Exchange Rate Skyrockets on Account of Low US Consumer Sentiment
The Euro (EUR) has flown up against the US Dollar (USD) this afternoon as the Michigan consumer sentiment preliminaries revealed the lowest confidence levels in almost a decade. By comparison, the Euro is celebrating positive trading sentiment on strong data and accelerating vaccination rates.
At the time of writing, EUR/USD is trading at $1.1796, up 0.5% from today’s opening levels.
US Dollar (USD) Plummets on Disappointing Confidence Figures
The US Dollar (USD) turned down today against the majority of its peers as poor consumer confidence shook ‘Greenback’ trading sentiment.
Having printed at 81.2 in July, this month’s 70.2 figure represented a considerable loss in consumer sentiment. It was the lowest reading since December 2011, with widespread losses across income, age, and education subgroups and across all regions.
The US Dollar was already on the downturn against EUR as German data this morning printed with a reasonable outcome: meanwhile, USD investor spirits remained subdued from US CPI figures earlier in the week.
Federal Reserve policymaker Charles Evans asserted on Tuesday that more labour data was needed before making any changes to monetary policy, alongside more certainty that the pace of price increases would remain above the Fed’s 2% target.
Evans’ dovish assessment was supported by a slightly reduced inflation rate. Printing at 4.3% as expected, July’s rate fell on last month, signifying that burgeoning inflation had been temporary and tapering would not be necessary for a while yet.
Back to today, import prices failed to meet expectations, while coronavirus continues to wreak havoc globally. As a safe-haven currency, the US Dollar usually performs well in times of global uncertainty, but mixed data has limited ‘Greenback’s’ gains.
Euro (EUR) Shoots Up on Positive Data, USD Losses
The Euro has made considerable gains on the US Dollar today, as Euro area data published this morning showed a trade surplus of €18.1 billion – far better than the market expectation of €12.3 billion.
Recent figures have also shown that Eurozone countries are ahead of most other countries when it comes to Covid vaccinations. Slow to start, the bloc is now vaccinating at twice the rate of US or UK, with Spain, Portugal and Denmark in the lead. Such news is an encouragement to EUR investors.
German data today was reasonable, reporting a rise in wholesale prices: while July’s figure printed a little less than expected, it still contributed towards the highest yearly price rise since October 1974 – after the first oil crisis.
In the absence of any other data today, the Euro received a considerable boost from the US Dollar’s poor performance regarding the Michigan consumer sentiment index. Owing to the strong negative correlation between EUR and USD, any data that’s negative for the ‘Greenback’ supports the single currency.
EUR/USD Exchange Rate Forecast: USD to Fall Further on Retail Sales?
Among notable releases for the US Dollar next week is Tuesday’s publication of Retail Sales- which is forecast to contract on the month previous. If estimates are realised, USD could sustain some further losses.
Meanwhile, the FOMC minutes released on Wednesday are likely to shine a light on the Fed’s forward guidance going forwards, clearing up any discrepancies between policymakers’ reports.
The Euro will see employment change data published on Tuesday and core inflation on Wednesday, both of which could provide stimulus for EUR trading.
In addition to the data, the EUR/USD exchange rate will also be moved by any significant developments concerning the coronavirus and international politics.