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Euro US Dollar (EUR USD) Stumbles Despite Upbeat Eurozone GDP

  • Euro US Dollar Slides to 1.1690 – US Dollar Euro Hits 0.8503
  • Eurozone 2nd Estimate GDP Proves Strong – Euro Bolstered
  • US Retail Sales Beat Expectations – US Dollar Climbed

The Euro to US Dollar exchange rate fell today after yesterday’s positive US retail sales figures, though its descent did stabilise somewhat in the wake of today’s 2nd Eurozone gross domestic product (GDP) estimate.

The US received a run of positive data prints yesterday, with month-on-month export prices in July rising 0.4%, up from a previous -0.2% decline, and retail sales (month-on-month) climbing from 0.3% to 0.6% in July, smashing market expectations of a 0.4% rise.

This was the sharpest jump in retail trade since December of last year and was predominantly driven by a jump in sales at motor vehicle and parts traders and miscellaneous store retailers.

This leap caused some to posit that the US economy is building up stream once again, driving even more debate to the already yo-yoing bets on a final rate hike in 2017.

Sal Guatieri, Senior Economist at BMO Capital Markets, Toronto, supported this sentiment, asserting:

‘American shoppers flocked to the malls in July, suggesting consumers are well-positioned to propel the economy forward in the second half of the year […] It should tamp down chatter about the Fed delaying rate hikes until next year’.

Eurozone 2nd Estimate GDP Upwardly Revised – EUR USD Steadies

The Euro’s drop against the US Dollar was slowed this morning, however, with the release of the anticipated Eurozone 2nd estimate GDP figures.

Eurozone GDP expanded by 0.6% in the three months to June 2017, in line with the original estimate and up from the previous period’s 0.5% growth.

The year-on-year estimate, however, beat both the consensus and the previous figures (2.1% and 1.9%) by coming in at 2.2%, with annual GDP growth accelerating in Germany Italy, France and Spain.

EUR USD forecast: Euro US Dollar Liable to Claw Back Gains if US Data Prints Disappoint

Whilst the Euro currently remains on the back foot against the US Dollar after yesterday’s positive US data releases, there could be space for it to claw back some gains if today’s US data disappoints.

Currently US building permits (month-on-month) for July are set to drop -2.0% after a previous increase of 9.2% – should this occur then the Euro US Dollar exchange rate may well edge higher.

Tonight will also feature the release of July’s FOMC meeting minutes – something that could knock the exchange rate either way, especially as there is currently a great deal of debate regarding the likelihood of another interest rate hike this year for the US.