Negative Eurozone Consumer Confidence Estimate Causes EUR/USD Exchange Rate Losses
The Euro (EUR) has made a minor loss against the US Dollar (USD) today, following the release of Eurozone consumer confidence data.
The preliminary reading for July has shown a reprint in the negative range with -0.6 points; perhaps worse, May’s reading was revised from -0.5 points to -0.6.
On paper, this hasn’t been good news or bad news; while the reading is still negative, it wasn’t the -0.7 point result that was forecast.
Taking a measured approach to the data, ING economists said:
‘Ahead of the European Central Bank (ECB) meeting on Thursday, the governing council is looking for clues on whether the Eurozone is going through a soft patch or a downswing.
‘This release ticks the soft patch box as did the industrial production data released last week.
‘Surely not enough to make the July meeting more than a snooze fest, but a hopeful note for the Eurozone economy in the second half of the year.’
US Dollar to Euro (USD/EUR) Exchange Rate Rises despite Tensions with Iran
Political developments have limited US Dollar to Euro (USD/EUR) exchange rate gains today, but the US currency has still advanced in the pairing.
This appreciation comes after an aggressive exchange between Iranian officials and US President Donald Trump, which has rattled traders and limited USD gains.
The situation began when Mr Trump re-imposed US sanctions on Iranian oil exports earlier this year.
In response, Iranian President Hassan Rouhani threatened to disrupt oil exports if Iran cannot export its own stockpiles – this brought threats from Mr Trump.
While the news has unsettled USD traders today, the US Dollar hasn’t crashed as it is thought that an actual war between the US and Iran is unlikely.
Euro to US Dollar Exchange Rate Forecast: Is EUR/USD Turbulence ahead on PMI Stats?
The Euro (EUR) is at risk of making losses against the US Dollar (USD) on Tuesday morning, when a collection of Eurozone PMI estimates are due for release.
These will cover areas like the manufacturing and services sectors in countries like France and Germany, along with the wider Eurozone.
The current expectation is for July’s German and Eurozone PMI estimates to show slowing activity during the month, which could lower Euro demand.
Despite the potential for Euro losses on tomorrow’s Eurozone PMIs, however, the US Dollar might not be able to advance in the pairing when US PMI stats are released.
Out during the afternoon, these are predicted to show a slowdown for July’s overall composite activity estimate, which could worry USD traders.
Which currency wins out may depend on the confidence levels of Euro and US Dollar traders.
It is worth remembering that none of the flash estimates are guaranteed, so there is an equal chance of a Euro or US Dollar rally tomorrow on surprise PMI growth.