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Euro US Dollar (EUR/USD) Exchange Rate Tumbles Ahead of US Labour Market Data

Eurozone Retail Sales Plummet in March – Euro (EUR) Exchange Rates Encumbered

The Euro US Dollar (EUR/USD) exchange rate tumbled on Friday as markets responded to a drastic fall in the Euro Area’s March retail sales print.

According to Eurostat, year-on-year retail sales in the bloc fell from 1.8% to 0.8%, confounding expectations of a rise to 1.9%.

The monthly reading also disappointed, falling from 0.3% (downwardly revised) to 0.1%, well below the expected 0.5% print.

This weakness in late Q1 retail sales was already represented somewhat by the subpar Q1 GDP result, however, with savvy investors somewhat unsurprised that retail sales plummeted during the extreme-weather period.

In other news, the Eurozone’s purchasing managers’ index (PMI) composite reading for April also missed its mark, falling from 55.2 to 55.1.

This was well above the 50-point mark that separates expansion from contraction, but still the lowest recorded score since January 2017.

Ultimately, market demand for the Euro remains low, with easing inflation and below-forecast economic growth liable to keep the European Central Bank (ECB) dovish for the foreseeable future.

US Dollar (USD) Exchange Rates Rally as US Trade Deficit Shrinks

The US Dollar (USD) rallied on Friday, supported by optimism for the imminent US labour market data releases and news that the US trade deficit shrunk in March.

According to the US Department of Commerce, the trade deficit fell to a seasonally adjusted -$49B in March, down 15% from a month earlier and marking a six-month low.

The trade deficit with China – a major point of contention between US President Donald Trump and Bejing also notably fell by 11%.

This fall was largely due to a surge in the exportation of soybeans, corn and crude oil, with real goods exports hitting the highest levels on record.

This news boded extremely well for the US economy, and sent the US Dollar even higher against the backdrop of labour market tightening.

Euro US Dollar (EUR/USD) Exchange Rate Forecast: US Labour Market Figures IMMINENT

The Euro US Dollar (EUR/USD) exchange rate could see greater volatility this afternoon when markets respond to the latest US labour market figures.

Markets are expecting the US unemployment, non-farm payrolls and wage growth releases, with unemployment expected to shrink even lower to 4%.

This should keep the US Federal Open Market Committee (FOMC) on track to raise interest rates in June, particularly with the central bank repeatedly pointing to the strength of the labour market as a deciding factor in future policy decisions.