EUR/USD Exchange Rate Sinks as Global Market Sentiment Stabilises on US-China Talks
The Euro US Dollar (EUR/USD) exchange rate is down today by 0.4% and is currently trading around $1.1251 on the inter-bank market.
The US Dollar (USD) gained against the Euro (EUR) today following the news that the US and China will be wrapping up trade talks – with China set to aim for an early May announcement on a possible deal between the two superpowers.
A spokeswoman for the State Administration of Foreign Exchange (SAFE), Wang Chunying, commented:
‘The trade negotiations between China and US have achieved substantial progress, and this has played an important role in stabilising market sentiment.’
The Euro, meanwhile, has been dragged down by disappointing economic data today.
David Cheetham, a Chief Market Analyst at the online trader, XTB, commented:
‘[T]he overall picture from the latest batch of industry surveys across the Eurozone isn’t pretty, and this has caused both the single currency and stock markets on the continent to come under pressure.’
USD/EUR Exchange Rate Rises as US Retail Sales Improve
Today saw the printing of the US retail sales control group figures for March, which exceeded expectations and rose to 1.6%.
These were followed by the release of the US continuing jobless claims figures for April, which fell below forecast at 1.653M, buoying confidence in the ‘Greenback’ as unemployment drops.
Many USD traders, however, will be awaiting the publication of the Markit Manufacturing PMI figures for April later on today.
EUR/USD Exchange Rate Sinks as Eurozone Manufacturing Contracts
The Euro, meanwhile, weakened against the US Dollar following the disappointing flash Eurozone Markit Manufacturing PMI figures for April, which remained contracted at 47.8.
Chris Williamson, a Chief Business Economist at IHS Markit, commented:
‘The data add to worries that the economy has failed to rebound with any conviction from one-off factors that dampened activity late last year, and continues to show only very modest growth in the face of headwinds from slower global demand growth and subdued economic sentiment.’
The flash German Markit Manufacturing PMI figures for April, meanwhile, also contracted at 44.5, further weakening confidence in the Eurozone’s economy today.
These were followed by weaker-than-expected German PPI figures for March.
EUR/USD Forecast: US Dollar Could Weaken on Increased Risk Appetite
‘Greenback’ traders will be looking ahead to tomorrow’s publication of the US building permits figures for March, which are expected to sink against February’s figures.
These will be followed by the US housing starts figures for March.
Tomorrow, however, will see few Eurozone economic data with the exception of the Italian business confidence figures, due to it being a bank holiday.
It is likely that many Euro traders will be keeping a close eye on Brexit developments in the UK, and with any signs of cross-party talks forming a consensus that could pass through Parliament, this could offer the single currency some relief from political tensions.
The EUR/USD exchange rate is likely to be driven by political factors into next week, and with any further signs that US-China trade talks are progressing, this could weaken the US Dollar as traders flee to riskier assets.