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Euro US Dollar (EUR USD) Exchange Rates Bearish Before ECB Rate Decision

  • Euro US Dollar Steadies to 1.1811 – US Dollar Euro Hits 0.8463
  • US Durable Goods Orders Beat Expectations – US Dollar Bolstered
  • German GfK Consumer Climate Indicator Slides – Euro Remains Steady

The Euro US Dollar (EUR USD) exchange rate remained predominantly steady this morning with markets preparing for today’s October rate decision from the European Central Bank.

USD Exchange Rates Climb as US Durable Goods Orders Beat Expectations

New orders for US-made durable goods jumped by 2.2% month-on-month in September according to the US Commerce Department on Wednesday – beating August’s upwardly revised 2% climb and smashing the market forecast of a 1% gain.

The majority of this rise was driven by a jump in the order of transportation equipment, which demonstrated a 5.1% increase, whilst nondefense aircraft and parts climbed by 31.5% (bolstered by a rise in Boeing aircraft orders).

Meanwhile, non-defence capital goods orders (excluding aircraft) jumped 1.3%.

As a result of these optimistic figures, economists have begun to consider the possibility that sustained GDP growth in the US could reach 3% in 2018.

Ian Shepherdson, Economist at Pantheon Macroeconomics shared this sentiment:

‘These orders are now clearly stronger than implied by the path of oil prices, which has been the dominant factors since mid-2014. If this continues, business capex will make a much bigger contribution to GDP growth through mid-2018 at least, making sustained 3% growth a real possibility’.

This news initially catapulted the ‘Greenback’ but as of Thursday morning the EUR USD exchange rate has been left trading in a narrow band.

EUR Exchange Rates Hold Steady despite Disappointing German GfK Consumer Sentiment Survey

German consumer confidence is predicted to fall in November, according to survey data from market research group GfK.

GfK’s consumer sentiment index dropped to 10.7, down from October’s prediction of 10.8 and below the prediction that it would remain unchanged.

It should be noted, however, that consumer sentiment in Germany remains robust, despite the drop.

The impact on the Euro was minimal, with yesterday’s positive German Ifo survey readings helping keep the single currency afloat.

EUR USD Forecast: What can we expect from Today’s ECB Rate Meeting?

The ECB is widely expected to announce a shift in policy today, with the central bank forecast to outline its plans for the unwinding of their €60bn-a-month quantitative easing (QE) programme.

The bank is not expected to adjust interest rates, however, with persistently weak Eurozone inflation continuing to weigh on any hope for a rate hike for the foreseeable future.

Inflation in the Eurozone has only actually entered its target range once since 2013, but the bank remains confident that underlying pressures will build into 2018.

Markets are concerned, however, that Bank Governor Mario Draghi will be inclined to speak dovishly in an attempt to stop the Euro climbing too high.

If this occurs the EUR/USD exchange rate is very likely to decline.