EUR/USD Exchange Rate Rangebound as Eurozone Economy Raises Concern
The Euro US Dollar (EUR/USD) exchange rate is steady today and is currently trading around $1.1311.
The Euro held steady following the publication of the Eurozone’s GDP figures for the fourth-quarter, which remained unmoved at 0.2%.
However, the year-on-year Eurozone GDP fell to 1.1%, which has left some single currency traders nervous as the Eurozone further indicates a slowing.
The US Dollar, meanwhile, steadied today following last night’s publication of the Beige Book report from the US Federal Reserve which was sober in tone, with 12 districts seeing a ‘slight-to-moderate’ growth through late January and February, with Philadelphia and St Louis reporting ‘flat economic conditions’.
Today saw tensions flare up between the US and China as Chinese tech giant, Huawei, sues the US over a law which prevents government agencies from purchasing Chinese equipment.
With US-China trade talks ongoing, this has left many US Dollar traders feeling jittery.
Jin Xu, a former Senior Commerce Minister Official, remained upbeat, commenting:
‘Both countries agree to have more and more mutual understanding and also want to build much better relations for business people for the two countries… We hope the Huawei case could be solved fairly according to the law. Because China, U.S., even Canada, we should stick to our law and we hope this case could be solved fairly.’
USD traders will be looking ahead to the nonfarm productivity figures for the fourth-quarter today, which are expected to decrease to 1.6% against the previous quarter’s 2.3%.
USD/EUR Exchange Rate Rangebound as Traders Brace for US Labour Figures
Today will also see the publication of the US continuing jobless claims figures for January, which are expected to decrease, possibly providing some uplift for the ‘Greenback’.
These will be followed by the release of the US unit labor costs figures for the fourth-quarter, which are also expected to increase to 1.6% against the previous quarter’s 0.9%.
The US Dollar has remained relatively weak today following yesterday’s release of the US trade balance figures which showed a trade deficit that rose to its highest level in over 10 years, reflecting the negative effects of the US tariffs.
EUR/USD Exchange Rate Flat as Euro Traders Await ECB Interest Rate Decision
EUR traders, however, will be looking ahead to the European Central Bank’s (ECB) interest rate decision today, which is expected to remain at 0%. With any dovish comments in the monetary policy statement, however, this could see the Euro weaken against the US Dollar.
This is causing some concern with some analysts expecting the ECB to slash its growth forecast for 2019.
The Italian global bank and financial services company, UniCredit, commented in a note to its clients:
‘Today, we expect clearer hints that the Governing Council is leaning towards further action to help banks cope with the June ‘cliff effect’ on liquidity, but a formal announcement with technical details might only come in April.’
USD/EUR Forecast: EU-UK Brexit Consensus Could See Euro Rise
USD traders will be awaiting the publication of the US nonfarm payrolls figures for February tomorrow, which are expected to decrease.
These will be followed by the US year-on-year average hourly earnings figures for February, which are, however, expected to increase to 3.3%.
Euro investors, however, will be awaiting the German factory order figures for January tomorrow, and with these expected to increase this could prove EUR-positive.
The EUR/USD exchange rate, however, is likely to remain sensitive to political developments towards the end of this week, and with the EU demanding that the UK deliver a reformed plan on the Irish backstop within 48 hours, any sign of a compromise on Brexit could benefit the Euro.