EUR/USD Exchange Rate Improves as US Dollar Struggles on US-China Trade War
The Euro US Dollar (EUR/USD) exchange rate edged higher today, leaving the pairing trading around $1.109.
The Euro (EUR) rose against the US Dollar (USD) as US-China trade tensions flared up following US President Donald Trump’s announcement of fresh tariffs on Chinese goods, further exacerbating a trade war between the two superpowers.
The US Chamber of Commerce was downbeat, commenting:
‘[These latest tariffs] will only inflict greater pain on American businesses, farmers, workers and consumers, and undermine an otherwise strong US economy.’
As a result, traders have fled from the US dollar safe haven to the Euro, providing some much-needed uplift for the European currency.
Today also saw the publication of the year-on-year Eurozone retail sales figures for June which rose from 1.0% to 2.6% – their biggest jump since 2017.
Month-on-month also improved above consensus, rising from -0.6% to 1.1%.
Bert Colijn, a Senior Economist at ING, said:
‘[M]ore consumers indicate they are making major purchases at present, which is boosting retail sales figures. Even though consumers do view the months ahead with reservations, this is not leading to lower consumption of big ticket items, at least not right now.’
USD/EUR Exchange Rate Sinks as Nonfarm Payrolls Figures for July Sink
The US Dollar fell against the Euro following the publication of the US nonfarm payrolls figures for July, which confirmed consensus and fell from 193 thousand to 164 thousand.
These were followed by the US year-on-year average hourly earnings figures for July, which rose from 3.1% to 3.2%.
The US Bureau of Labour Statistics said in their statement:
‘In July, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.98, following an 8-cent gain in June. Over the past 12 months, average hourly earnings have increased by 3.2%.’
Meanwhile, US unemployment rate figures for July confirmed consensus and held steady at 3.7%.
The US Dollar however continues to be dragged down by rising global trade uncertainty following Donald Trump’s exacerbation of US-China relations today.
EUR/USD Outlook: Brexit Uncertainty Could Drag Down Euro Next Week
US Dollar investors will be looking ahead to Monday’s ISM Non-Manufacturing PMI for July, which is expected to improve by 55.1 to 55.5.
Euro traders will be looking to Monday’s publication of the Eurozone Markit PMI Composite FOR July, which is expected to hold at 51.5.
Ongoing Brexit uncertainty between the EU and the UK is likely to continue to haunt market confidence in the single currency however.
The EUR/USD exchange rate will likely lose some of its gains next week, as global political uncertainty and concerns around the Eurozone’s economy are likely to drag down the European currency.