EUR/USD Exchange Rate Rangebound Despite Rising Eurozone Recession Fears
The Euro US Dollar (EUR/USD) exchange rate steadied at around US$1.103, despite this morning’s publication of the German factory orders for July, which fell by a worse-than-expected -2.7%.
As a result, Euro traders have become jittery, with the German economy – which is the largest in the Eurozone – increasingly looking set for a recession in the third quarter.
Germany’s Economy Ministry said in its statement:
‘[O]ngoing growing international trade conflicts and restrained expectations from manufacturing businesses indicate no fundamental improvement in industrial growth in the coming months.’
Iaroslav Shelepko, an Analyst at Barclays, also added:
‘Despite a notable deceleration in the new orders slump. [And] continued softness in demand amid waning backlogs of work is consistent with the manufacturing sector dragging GDP growth into negative territory in the second quarter.’
Meanwhile, US Dollar investors are remaining poised for a busy economic calendar today.
Today will see the publication of the US ISM Non-Manufacturing PMI for August, which is expected to improve from 53.7 to 54. As a result, we could see the US Dollar begin to edge higher against the European currency.
USD/EUR Exchange Rate Flat as US-China Trade Talks Set to Renew in October
The US Dollar (USD) failed to make any notable gains on the Euro (EUR), although US markets are feeling more hopeful over US-China trade developments. Talks between the two superpowers are set to renew in October.
David Madden, an Analyst at CMC Markets, said:
‘Global equity markets pushed higher yesterday as a feeling of optimism circulated around the globe. It was announced overnight that US and Chinese delegates will meet in October to discuss trade. Combined with the developments in Hong Kong, it helped the positive outlook in Asia.’
The ‘Greenback’ could, however, edge higher against the European currency is the US jobs figures, which are due out later today, show any signs of improving.
However, any signs of deterioration in the US non-farm productivity figures in the second-quarter could hold back some of the US Dollar’s gains.
EUR/USD Outlook: Could Euro Gain on Dovish Fed Powell Speech?
US Dollar traders will be looking ahead to tomorrow’s publication of August’s nonfarm payrolls figure. As these are expected to decrease from 164 thousand to 158 thousand, we could see the USD/EUR exchange rate begin to ease.
Tomorrow will also see the publication of the US average hourly earnings figure.
Meanwhile, Euro investors will be awaiting tomorrow’s release of Germany’s industrial production figure for July. This could provide some relief for Euro markets, as the figure is expected to rise from -1.5% to 0.3%, perhaps soothing fears of a recession for the German economy.
The EUR/USD exchange rate could benefit tomorrow, however, if Jerome Powell, the Chair of the Federal Reserve, provides evidence for a slowing US economy amid rising geo-economic strains.