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Euro US Dollar Rate Deteriorates on Worse-than-Forecast German Trade

The Euro has declined against the US Dollar today, owing to widespread disappointment cause by recent German trade figures.

  • EUR USD trades down at 1.1738 – USD EUR rate rises to 0.8517
  • Falling German trade surplus damages Euro – French factory growth failed to impress
  • US Dollar gains on tax plan hopes – Analysts remain wary of tax reforms
  • Euro rise possible on next week’s German stats – Will USD rise on incoming jobs data?

The US Dollar has firmed thanks to trader optimism about tax reform, which still remains relatively high.

Euro US Dollar Rate Declines after German Trade Surplus Slides

The Euro has fallen by -0.3% against the US Dollar today, while seeing greater losses in other currency pairings.

This late-week decline stems from German trade balance data for October, which has shown a larger-than-expected decline in the national trade surplus.

While the new surplus reading of 18.9bn is still impressive, traders have hardly been reassured by this unexpected drop in national exporting.

On the plus side, France has reported much better-than-expected industrial production in October.

Economists had predicted a decline of -0.1%, but French factory output actually rose sharply by 1.9%.

Cautious Optimism about US Tax Plans Pushes USD/EUR Exchange Rate Up

Planned nationwide tax reforms have remained in the spotlight today, leading to gradual US Dollar gains.

The USD has appreciated against the Euro and the Pound, although elsewhere a number of losses have been seen.

There is still a broad consensus that sweeping tax reforms might actually boost US economic growth, as promised by President Donald Trump.

The reforms have not been without criticism, however; one key concern is that they could disproportionately benefit the wealthy compared to the less well-off.

German Data could Boost Euro USD Exchange Rate Next Week

Over the coming week, German economic news will continue to play a significant role in EUR/USD exchange rate movement.

First up will be Tuesday’s ZEW survey results for economic confidence; economists are on the fence about the economic sentiment index, which could dip in December.

More positively, expectations are for Wednesday’s finalised German inflation readings to rise in all fields.

Rounding off this trinity of German data will be Thursday’s PMI activity readings. If services, composite and manufacturing measures all rise, the Euro could rally on Thursday morning.

Closing off a packed week of Euro news on Thursday afternoon, the European Central Bank (ECB) will announce its last interest rate decision of the year.

The overwhelming assumption is that the ECB will leave interest rates at 0%.

Despite this, if ECB President Mario Draghi is optimistic about the Eurozone’s performance in 2018, the EUR/USD exchange rate could see a clear rise.

This week’s last major Eurozone news is now out, but the US still has something left in the tank for this afternoon.

Upcoming data will include reported unemployment and new jobs added in November, along with a University of Michigan confidence reading.

The jobless rate isn’t expected to shift from 4.1%, but the US Dollar could still be boosted by growing confidence and a strong posting for the jobs-linked non-farm payrolls reading.

Current Interbank EUR USD Exchange Rates

At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1738 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8517.