EUR/USD Exchange Rate Rangebound as US Nonfarm Productivity Improves
The Euro US Dollar (EUR/USD) exchange rate steadied today, leaving the pairing trading around $1.115 following the publication of the US retail sales control group figure for July, which exceeded forecasts and rose from 0.7% to 1%.
Analysts at Reuters commented:
‘U.S. retail sales surged in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, which could help to assuage financial markets’ concerns that the economy was heading into recession.’
The flash US nonfarm productivity figure for the second quarter also improved above consensus, rising to 2.4%.
However, continuing jobless claims for August came in worse-than-expected, increasing to 1.726 million despite the expected 1.690 million.
US-China trade tensions remain in focus for many ‘Greenback’ investors, with China vowing to retaliate against the latest US tariffs on Chinese imports.
This follows comments from the Chinese State Council Tariff Committee which said in its statement today that China ‘has no choice but to take necessary measures to retaliate’.
A spokesman for the Chinese Foreign Ministry was more measured, saying:
‘We hope the US can work in concert with China to implement the two Presidents’ consensus that was reached in Osaka, and to work out a mutually acceptable solution through equal-footed dialogue and consultation with mutual respect.’
EUR/USD Exchange Rate Flat as European Markets Close for Assumption Day
The Euro has remained steady today, with European markets closed for The Assumption Day bank holiday.
However, ongoing fears over Italy’s potential general election, which was called for by Eurosceptic Deputy Prime Minister Matteo Salvini over the weekend, have remained in focus despite the Italian senate’s appointing of Italian PM Giuseppe Conte to address the political crisis on August 20.
Mattia Diletti, a Politics Professor at Sapienza University, Rome, was downbeat:
‘It’s a long path, but he is popular and doesn’t have any real challenger. He’s excellent at communication and doesn’t care about political etiquette – he’s like [Donald] Trump – maybe even better than him at a national level.’
Euro traders are also becoming increasingly concerned over the possibility of a global economic recession. Germany’s economy also showing signs of struggling following the contraction in growth in the second quarter.
EUR/USD Outlook: US Michigan Consumer Sentiment Index in Focus
US Dollar investors will be looking ahead to tomorrow’s flash Michigan Consumer Sentiment Index for June, which is expected to ease from 98.4 to 97.2.
As a result, we could see the US Dollar lose some ground against the European currency.
Meanwhile, Euro traders will be looking ahead to tomorrow’s Eurozone trade balance figures for June.
The Euro US Dollar exchange rate is likely to remain volatile for the rest of this week, with both US-China trade tensions remaining in focus alongside increasing economic concerns for the Eurozone.