EUR/USD Exchange Rate Rangebound, Lagarde Offers Glimpse of Hope for Eurozone Growth
The Euro US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.113 after the European Central Bank (ECB) held its interest rates at a record low of 0% today.
Today also saw the debut of the newly appointed ECB President, Christine Lagarde, who gave some hope to Euro (EUR) traders after she said that the economic picture had shown ‘some initial signs of stabilisation in the growth slowdown’ and a ‘mild increase’ in inflationary pressures.
However, the Eurozone’s falling Industrial Production figure for October, which eased from -0.1% to -0.5%, held back some of the single currency’s gains today.
Peter Vanden Houte, Chief Economist at ING, commented:
‘Bottom line is that looking at real date, the fourth quarter started on a weak footing and that this weakness could linger on a bit longer as the main uncertainties could still take some time to dissipate.
‘A weak quarter will create a negative base effect and that is the reason while, even taking into account some improvement over the course of the year, we only expect 0.7% GDP growth in 2020, clearly below consensus.’
USD/EUR Exchange Rate Steady, US PPI Falls Below Consensus
The US Dollar (USD) held steady after today’s publication of November’s US PPI figure for November, which fell below consensus from 1.6% to 1.3% year-on-year.
Analysts at Reuters, however, commented:
‘U.S. producer prices were unexpectedly unchanged in November as increases in food and gasoline prices were offset by declining costs for services, pointing to muted inflation despite a recent uptick in consumer prices.’
Today also saw the release of December’s US Initial Jobless Claims, which rose unexpectedly from 203 thousand to 252 thousand.
Meanwhile, US Dollar (USD) investors are remaining cautious today after yesterday saw the Federal Reserve hold its interest rates at 1.75%
Jason Pride, Chief Investment Officer at Glenmede Trust Co., comments on the Fed’s actions:
‘It’s ‘steady as she goes’ from the Fed today – the statement provided little ground-breaking news on the path of monetary policy. The prevailing message out of today’s meeting is that the Fed remains on hold, barring any material upside surprises for inflation.’
EUR/USD Outlook: Could Rising US Retail Sales Boost the ‘Greenback’?
US Dollar investors will be looking ahead to tomorrow’s publication of the US Retail Sales Control Group figure for November, which is expected to hold at 0.3%.
However, any surprise increase in retail sales ahead of Christmas could provide some uplift for the ‘Greenback’.
Euro traders will be focusing on the UK’s general election outcome tomorrow, with any signs of a Conservative majority likely providing some stability for the single currency.