Euro US Dollar (EUR/USD) Exchange Rate Flat as Trump Announces US and China Will ‘Make a Deal’
The Euro US Dollar (EUR/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.1200.
US President Donald Trump tweeted that China’s Vice-Premier Liu He is headed to Washington to ‘make a deal.’
In his tweets, the President also confirmed that China has been making attempts to renegotiate the draft trade agreement.
The President Tweeted:
‘The reason for the China pullback and attempted renegotiation of the Trade Deal is the sincere hope that they will be able to “negotiate” with Joe Biden or one of the very weak Democrats, and thereby continue to rip off the United States ($500 Billion a year) for years to come…
‘Guess what, that’s not going to happen! China has just informed us that they (Vice-Premier) are now coming to the US to make a deal. We’ll see, but I am very happy with over $100 Billion a year in Tariffs filling US coffers… great for US, not good for China!’
This could dampen sentiment in the safe-haven US Dollar, as risk appetite is likely to rise thanks to the reassurance that a US-China trade deal is potentially within grasp.
Euro (EUR) Muted despite Unexpected Rise in German Industrial Production
On Wednesday data revealed that German industrial production rose by a higher-than-forecast 0.5% in March.
Industrial output unexpectedly rose for the second consecutive month despite forecasts suggesting it would contract.
The rise was led by an increase in consumer goods, with German construction rising 1%.
Commenting on the data, Bloomberg Economist, Maeva Cousin said:
‘Germany’s industrial production data for March is reassuring news. It confirms output in the industrial sector expanded in the first quarter, after two quarters of sharp declines, and shows a pick-up in manufacturing activity.’
European Commission Slashes German Growth Forecasts
On Tuesday, the European Commission slashed 2019 growth forecasts for two of the largest economies in the bloc, Germany and Italy.
The Commission’s economic report predicted that German GDP will only expand by 0.5% this year.
This prediction was slashed from its prediction of 1.1% growth just three months earlier.
However, the EC still expects growth in the whole of the European Union to hit 1.4% in 2019.
In a statement, the Commission said:
‘As global trade and growth are expected to remain weaker this year and next compared to the brisk pace seen in 2017, economic growth in Europe will rely entirely on domestic activity.’
Euro US Dollar Outlook: Will Impressive US Inflation Buoy USD?
On Thursday, the US Dollar (USD) could rise against the Euro (EUR) following the release of the US Producer Price Index (PPI) excluding food and energy.
If PPI rises higher than forecast in April, the ‘Greenback’ could receive an upswing of support.
Looking ahead to Friday, the US Dollar could rise further following the release of the US Consumer Price Index (CPI).
If CPI rises higher than expected and meets the Federal Reserve’s inflation target, the Euro US Dollar (EUR/USD) exchange rate could slide.