Euro US Dollar (EUR/USD) Exchange Rate Muted Ahead of Trump-Xi Meeting
The Euro US Dollar (EUR/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.1385.
The US Dollar was left under pressure as traders were cautious ahead of the meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit.
Last week, the Dollar suffered from its largest weekly slump in four months, which left USD under pressure.
Meanwhile, on Monday a Chinese negotiator said that both sides must compromise at the Trump-Xi meeting.
The Vice-Minister of Commerce, Wang Shouwen stated that China should not be the only one to make compromises, and stated:
‘We should meet each other halfway, which means that both sides will need to compromise and make concessions, and not just one side.’
Euro (EUR) Flat as German Business Morale Slumps to Four-and-a-Half Year Low
On Monday, data revealed that German business morale slumped to its lowest level since November 2014.
This added to speculation that growth in the Eurozone’s largest economy contracted in the second quarter, which weighed on the Euro.
The IFO Institute said that its business climate index slumped for the third successive month.
Business climate fell to 97.4 in June from 97.9 in May.
IFO Economist, Klaus Wohlrabe said the main cause of uncertainty for German businesses were US-China trade tensions.
He did note that he did not expect a recession, a view that is also held by analysts.
In a note, Christina Iacovides of Capital Economics wrote:
‘All told, we expect the German economy to slow to a little more than a crawl in the second quarter.’
Euro US Dollar Outlook: Will a Dovish Fed Weigh on USD?
Looking ahead to Tuesday, the US Dollar (USD) could fall against the Euro (EUR) following a speech from the Federal Reserve’s Chair Jerome Powell.
If Powell’s tone is overly dovish and emphasises the risks of US-China trade tensions, the ‘Greenback’ could fall.
Meanwhile, on Wednesday the single currency could slump against the Dollar following the release of the German GfK Consumer Confidence survey.
If consumer confidence slumps further than expected in July, it could cause the Euro US Dollar (EUR/USD) exchange rate to slide.