EUR/USD Exchange Rate Rises as Investors Seek Riskier Currencies after US-China G20 Truce
The Euro US Dollar (EUR/USD) exchange rate is up today – and is currently trading at $1.1359 – after the ‘Greenback’ was hit over the weekend.
President Donald Trump came to a truce with China’s President Xi Jinping at the G20 summit, agreeing to withdraw his threat to boost tariffs on $200 billion of Chinese imports.
This shifted currency traders from safe havens to more risky currencies, which left USD down.
EUR meanwhile found some strength as the European Commission was due to begin debates over Italy’s budget today, with the Italian Prime Minister Giuseppe Conte expressing optimism at the G20 summit this weekend, saying:
‘We are working on hypotheses with the European Union . . . We trust that in coming days we will be able to discuss a technical solution.’
EUR/USD Exchange Rate Strengthens after Germany’s Positive Manufacturing Figures
The Euro was boosted by today’s release of the Eurozone’s manufacturing PMIs for November printed at 51.8.
Germany’s manufacturing PMIs were also released, showing a figure of 51.8, an increase of 0.2 on October’s figure.
EUR was also buoyed today with reports of a possible softening of Italy’s stance on its budget, with signs that deputy Prime Ministers, Lugi Di Maio and Matteo Salvini in talks Prime Minster Giuseppe Conte were ‘convincing [them] of a deficit of 1.9% to 2%’, while negotiations are underway for wider margins on investments.’
US Dollar Euro (USD/EUR) Exchange Rate Down on Signs of Slowing US Economy
The US Dollar (USD) however may find some support from today’s release of ISM’s manufacturing PMIs for November, which are expected to increase, bolstering ‘Greenback’ investor confidence.
These gains could be clipped by the release of ISM’s prices paid for November which are expected to plunge by -3.3.
Total vehicle sales for November are also expected to fall.
With the USD coming under increasing pressure, which was confirmed by the dovish tones from the Chair of the Fed, Jerome Powell, during Friday’s speech, ‘Greenback’ investors remain hesitant as the US economy shows signs of slowing down.
EUR/USD Outlook: Italy’s Softening Stance on Budget and US Economy Remain in Focus
The EUR/USD exchange rate will be sensitive to any developments between the EC and Italy this week, with any signs of compromise coming from Italy’s leaders likely to bolster the single currency.
Prime Minister Giuseppe Conte’s admission of making ‘more progress at every meeting’ is a cause for investor optimism in EUR, with fears of the EC’s threats of disciplinary actions quelled by signs of a consensus.
Brexit, however, is an on-going concern for the Eurozone, with Theresa May coming under increasing pressure to gain support for her EU-UK withdrawal agreement as it faces its final hurdle with Parliament remaining divided.
Wednesday will see Mario Draghi, the President of the European Central Bank, delivering a speech, with EUR investors paying attention for hawkish remarks that suggest an economically healthy Eurozone.
Wednesday will also see the release of the US services PMIs which are expected to remain bullish.