Euro to US Dollar Exchange Rate Gains Limited amid Mixed German PMIs
The Euro to US Dollar (EUR/USD) exchange rate has been trending higher for most of this week, but it may not sustain much of those advance attempts due to mixed ecostats weighing on the Euro (EUR) and trade speculation boosting the US Dollar (USD).
Since opening this week at the level of 1.1054, EUR/USD has been trending with an upside bias and briefly touched on a fortnight high of 1.1094 yesterday.
EUR/USD ultimately slipped on Thursday afternoon though, and at the time of writing on Friday is trending almost a third of a cent lower, near the level of 1.1068.
Investors were hesitant to buy the Euro too much amid the latest Eurozone economic uncertainties, while the US Dollar remained resilient on US trade hopes and speculation.
Euro (EUR) Exchange Rates Mixed amid Eurozone PMIs and Lagarde’s Speech
Euro investors have been cautiously optimistic on the shared currency for much of the week, and the currency has been driven higher by weakness in rival currencies like the Pound (GBP) and US Dollar.
The currency’s domestic support has been mixed though. Recent Eurozone data has shown signs of recovery in the Eurozone economy following months of slowdown, but today’s ecostats were mixed.
Germany’s final Q3 growth rate report met projections, meaning Germany avoided a recession this year.
However, Markit’s November PMI projections for the bloc were mixed. Manufacturing improved more than expected, recovering to 43.8 in Germany, but the bloc’s services sector appeared to perform worse than expected.
The data is likely to worsen concerns that the Eurozone services industry has been negatively impacted by months of weakness in trade and manufacturing.
This morning also saw Christine Lagarde’s first major speech as European Central Bank (ECB) President. Her speech had little impact on the Euro at the time of writing, indicating that markets were confident she would smoothly continue a similar mandate to ex-President Mario Draghi.
Continuity from @Lagarde, with a focus on a better policy/institutions alignment over the medium-term. Strategy review might be formally launched in December.
Meanwhile monetary policy will be driven by the economy, and the ECB should remain on hold based on today's PMIs. pic.twitter.com/uyOr6SlKmh
— Frederik Ducrozet (@fwred) November 22, 2019
US Dollar (USD) Exchange Rates Benefit from Trade and Economy Hopes
The US Dollar has been weaker for much of the past week, due to rising concerns that US-China trade relations were worsening and even speculation that a preliminary trade deal could be pushed back as far as next year.
However, Chinese officials continued to indicate that despite rumours, they were hopeful to get a trade deal of some kind soon.
This boosted confidence that even if a ‘phase one’ trade deal is a little further away, negotiations would continue either way. According to Hao Zhou, FX and EM Analyst at Commerzbank:
‘While there are many trade headlines over the past few days, one can also argue that this is actually a ‘status quo’,
At the end of the day, there is little progress on trade talks, and it looks like both sides are fine with another delay of the phase 1 deal,’
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Further Eurozone and US Data
Investors were hesitant to keep buying the Euro to US Dollar (EUR/USD) exchange rate today, despite signs that the bloc’s manufacturing sector was doing better than expected.
Amid continued concerns about the Eurozone economy’s mixed performance, Euro investors will be highly anticipating next week’s major Eurozone ecostats.
German business and consumer confidence will be published earlier in the week, with overall Eurozone confidence stats on Thursday. Key German and Eurozone inflation stats will also be published towards the end of the week.
The US Dollar, on the other hand, will be driven by US-China trade developments, though markets will be closely watching next week’s anticipated durable goods and Personal Consumption Expenditure (PCE) inflation stats.
US Michigan confidence data published this evening could also cause some late-week Euro to US Dollar (EUR/USD) exchange rate movement if it surprises investors.