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Euro US Dollar (EUR/USD) Exchange Rate Edges Down despite Rise in Eurozone Core Inflation

Euro US Dollar (EUR/USD) Exchange Rate Slips despite Eurozone Inflation Jumping to Six-Month High

The Euro US Dollar (EUR/USD) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of $1.1153.

Data released on Friday revealed that inflation in the Eurozone rose to a six-month high in April.

The Consumer Price Index (CPI) rose by 1.7% in April from 1.4% the previous month.

Eurostat revealed that energy prices and services were the biggest drivers of the jump in CPI.

Core inflation also jumped from 0.8% to 1.2%.

However, Christina Iacovides at Capital Economics believes the rise in core inflation will not last long, stating:

‘While we do not yet have a full breakdown of the Eurozone data, we know that the jump in core inflation was due to a sharp rise in services inflation, which we suspect was mostly driven by a rise in package holiday prices and airfares, given that the timing of Easter boosted prices for these items in March last year but April this year.

‘Looking ahead, we expect core inflation to fall back to about 1% in May, and remain broadly unchanged over the next couple of years. And as energy inflation declines we expect the headline rate to fall below 1% towards the end of this year.’


US Dollar (USD) Rises as US Worker Productivity Jumps in Q1 2019

On Thursday, data revealed that US worker productivity rose at its fastest rate in more than four years during Q1 2019.

Preliminary non-farm productivity rose at an annualised rate of 3.6% in the last quarter.

Further data revealed that US factory orders posted its largest increase in seven months.

Factory orders rebounded by a higher-than-forecast 1.9% in March, boosted by orders for electronic products and computers.

This likely buoyed the US Dollar ahead of Friday’s non-farm payrolls data.

Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Fall as US Hourly Earnings Rise?

Looking ahead to this afternoon, the US Dollar (USD) may rise against the Euro (EUR) following the release of the US average hourly earnings data.

If hourly earnings rises higher than forecast in April, the ‘Greenback’ could rise.

Later on Friday, the Dollar could rise further following the release of the US ISM Non-Manufacturing PMI.

If April’s PMI shows that business conditions in the non-manufacturing sector continues to grow, the Euro US Dollar (EUR/USD) exchange rate may slide.