Euro US Dollar (EUR/USD) Exchange Rate Rises despite Rebound in US Capital Goods Orders
The Euro US Dollar (EUR/USD) exchange rate rose over the course of Wednesday, with the pairing currently trading at around $1.1306.
The US Producer Price Index barely rose in February, which saw the smallest annual increase in more than one-and-a-half years.
PPI edged up 0.1% in February, with the index lifted by the rebound in the cost of gasoline.
Meanwhile, US non-defence capital goods orders (excluding aircraft) rose by a higher-than-forecast 0.8% in January.
Further aiding the ‘Greenback’ was the rise in durable goods orders, which rose by the most in six months.
Increased shipments in January likely point towards solid business spending on equipment at the start of the year.
This strong data could prompt an upgrade to economists’ low growth estimates for Q1 2019, however it will likely do little to change the perception the US economy lost momentum early in the year.
Euro (EUR) Rises on Better-than-Forecast Eurozone Industrial Production
Industrial production in the Eurozone rose higher than expected in January thanks to energy prices, despite the drop in German output.
Production in the Eurozone rose by 1.4% between December and January, and at an annual rate of 1.1%.
Increases in France and Italy, the second and third largest economies in the bloc, meant the weak data from Germany was offset.
Following this release, the Euro US Dollar (EUR/USD) exchange rate continued to rise.
US Dollar (USD) Slides following Smallest Annual Rise in CPI in Two-and-a-Half Years
The US Dollar (USD) continued to slide against the Euro (EUR) today following disappointing economic data.
Yesterday data showed that US consumer prices rose for the first time since October 2018.
The Consumer Price Index rose by 0.2%.
However, this increase was dampened by data showing that the increase in February was a modest one, resulting in the smallest annual rise in two-and-a-half years.
This, paired with slowing economic growth supports the Federal Reserve’s ‘patient’ approach towards future interest rate hikes in 2019.
Ryan Sweet a Senior Economist at Moody’s Analytics said:
‘We view the risks to the inflation outlook as weighted to the downside as the domestic economy has slowed more quickly than we had expected.
‘The Fed is on pause for the foreseeable future.’
Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Rise on Higher US Jobless Claims?
Looking ahead to tomorrow, the Euro (EUR) could continue to rise against the US Dollar (USD) following the release of the German Harmonised Index of Consumer Prices.
If consumer prices rise by 1.7% or higher in February, the single currency could be provided with an upswing of support.
There could be further movement in the pairing in the afternoon following the release of the US initial and continuing jobless claims.
If jobless claims increase more than predicted, it could cause the Euro US Dollar (EUR/USD) exchange rate to rise.