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Euro US Dollar (EUR/USD) Exchange Rate Steady, German Economy Shoes ‘Degree of Resilience’

EUR/USD Exchange Rate Rangebound, German Economy Moves in ‘Right Direction’

The Euro US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.107 after Germany’s Markit Composite PMI for November remained firmly in contraction territory at 49.2.

Phil Smith, Principal Economist at IHS Markit, was generally optimistic in his assessment, saying:

‘While still showing a degree of resilience, the service sector is growing only modestly and at its slowest rate for over three years. By contrast, manufacturing remains firmly in contraction, but many of the indicators here are at least moving in the right direction and it would seem the worst of the downturn is over barring any shocks.’

The EUR/USD exchange rate remained unmoved with investors becoming cautiously optimistic over the bloc’s returning economic strength.

Today also was the new President of the European Central Bank (ECB), Christine Lagarde, stated in her first major speech that uncertainties had ‘proven to be more persistent than expected’ and that global trade stability was ‘no longer an absolute certainty’.

However, with Mrs Lagarde being generally neutral on the ECB’s monetary policy going forward, today’s speech had little effect on the single currency.

USD/EUR Exchange Rate Steady, US-China Trade Relations Rise over Hong Kong Bill

The US Dollar (USD) failed to gain on the Euro (EUR) despite some relief over US-China trade relations after Chinese Vice President Liu He invited US Trade Representative Robert Lighthizer to further trade talks in Beijing.

However, tensions between the world’s two largest economies flared-up after the US Senate unanimously passed a bill to protect human rights in Hong Kong, with Beijing condemning Washington’s perceived meddling in Chinese affairs.

Geng Shuang, Chinese Foreign Ministry Spokesman, commented:

‘We urge the US to grasp the situation, stop its wrongdoing before it’s too late, prevent this act from becoming law [and] immediately stop interfering in Hong Kong affairs and China’s internal affairs.’

Market confidence in the ‘Greenback’ continues to remain mixed today, with any signs of US-China trade negotiations deteriorating likely to have an adverse effect on the US economy.

In US economic news, today will see the release of November’s flash Markit Manufacturing PMI, which is expected to rise from 51.3 to 51.5. This could boost the USD/EUR exchange rate on a return of positive sentiment in the American economy.

EUR/USD Outlook: Could ‘Greenback’ Weaken on US-China Trade Deal Breakthrough?

Euro (EUR) investors will be looking ahead to Monday’s release of November’s German IFO business climate figure, which is expected to ease from 94.6 to 93.3. Any further deterioration could weigh on the Euro as optimism in the Eurozone’s powerhouse economy continues to dwindle.

US Dollar (USD) traders, meanwhile, will be awaiting Monday’s publication of the US Chicago Fed National Activity Index for October, which is forecast to ease by -0.43.

US-China trade developments will continue to drive the USD/EUR exchange rate next week, with any signs of a ‘phase one’ trade deal becoming more plausible likely to weaken the US Dollar as traders seek out riskier assets.