- Eurozone Retail Sales Down – PMI results also disappoint
- European Commission’s Bearish Forecast – Hints that ECB policy is not enough
- US Dollar Strengthened by Lowered Risk Appetite – Wednesday data optimistic
- Update: US Non-Manufacturing Positive – USD begins rally against EUR
- Forecast: Key US Unemployment Due Friday – Non-Farm Payrolls also expected
Euro (EUR) Slumps as US Dollar (USD) Strengthened by Data
Wednesday’s positive US data finally weighed down the Euro during Thursday’s session as the EUR/USD pair plummeted by around -0.8%. At the time of writing, the pair trends in the region of 1.1404.
Euro investors were left uninspired as Eurozone data was scarce on Thursday, and the latest economic bulletin released by the European Central Bank (ECB) discussed nothing that investors did not already hear at the central bank’s April meeting.
US jobless claim data was also largely positive which helped the ‘Greenback’ advance. While the USD’s rally was slowed by reports of 274k new jobless claims, the amount of continuing jobless claims lightened more than forecasts indicated; from 2130k to 2121k.
EUR/USD Remains Largely Flat Throughout Wednesday
The US Dollar’s attempts to recover continued throughout Wednesday’s session, eventually bolstered by a slew of solid data. However, the data did little to dent EUR/USD’s position as it continued to trade around 1.1498.
Most vitally, the US’ highly anticipated Non-Manufacturing ISM report beat forecasts by rising from 54.5 to 55.7, beating out the forecast 54.8.
Other data to print above expectations included factory orders, improving from -1.7% to 1.1%, the US trade deficit which narrowed from -47b to -40.4b (past forecasts of -41.5b), and Composite PMI which improved from 51.7 to 52.4.
The sole poor release was ADP’s employment change figure; which was expected to come in at 196k, instead printing 156k.
This figure may have been enough to hold the US Dollar back, as it failed to advance on the Euro.
The Euro to US Dollar (EUR/USD) exchange rate attempted to advance during Tuesday’s session but ultimately trickled back down again after a slew of bearish Eurozone news was released.
EUR/USD had reached a peak of 1.1608 on Tuesday morning; the pairing’s highest point since January 2015. Investors then reacted to poor Eurozone data and the pair slumped to around 1.1491, where it currently trends narrowly.
Euro (EUR) Weighed by European Commission Warnings and Poor Data
The Euro has attempted to hold its ground in the last few days after being strengthened by last Friday’s bullish Gross Domestic Product (GDP) report. Unfortunately, this week’s fresh data has been largely unkind to the shared currency.
Retail sales data released on Wednesday scored unexpectedly low in both monthly and yearly prints. The monthly score came in at a contraction of -0.5%, despite forecasts that sales would fall from February’s 0.3% growth to a contraction of just -0.1%.
On the other hand, the key yearly figure disappointed forecasts of slowing from 2.7% to 2.6% by falling all the way to 2.1%. This followed April’s final composite PMI scores, with the German Composite PMI dropping from 53.8 to 53.6 and the general Eurozone PMI scoring 53.0 as expected.
The Euro’s slip against the US Dollar began on Tuesday, largely encouraged by the European Commission’s latest economic forecast. The forecast included warnings that growth would slow and that some major nations like France and Italy were likely to miss EU budget targets. According to Reuters;
‘The EU executive arm forecast that the economy of the 19 countries sharing the Euro would expand 1.6 percent this year, down from 1.7 percent last year, and accelerate to 1.8 percent in 2017. This is 0.1 point less than it forecast in February.
This stands in contrast to first quarter gross domestic quarter released last week that showed the euro zone growing 0.6 percent for the three months’
US Dollar Stands Ground as Investors Seek ‘Safe-Haven’ Currencies
The ‘Greenback’, still weighed down by slews of negative data, was finally allowed to advance slightly against the Euro on Tuesday and Wednesday as poor data held back the shared currency.
Still largely weak from lowered Federal Reserve rate hike bets and poor ISM Manufacturing data (which scored 50.8 on Monday), the US Dollar beat back the Euro as investors settled on their preferred risk-off currency.
Ongoing issues in the risky commodity bloc, such as oil price fluctuations and a shocking rate cut from the Reserve Bank of Australia (RBA) marked a heavy shift away from risk-sentiment and investors returned to the US Dollar and Euro in response.
Euro to US Dollar Exchange Rate Forecast: EUR/USD Likely to Move on Key US Data
A considerable set of United States data is due between now and the end of the week, with the most imminent being ISM’s Non-Manufacturing/Services Composite report for April.
The highly anticipated print is currently forecast to improve from 54.5 to 54.8, and a positive score would likely help the US Dollar recover from recently poor US data.
The ISM print is accompanied by other key reports. This includes MBA mortgage applications, ADP employment change, March’s trade deficit update, factory orders and durable goods orders during Wednesday’s session alone.
Thursday will see the release of US jobless claim data, followed by the highly anticipated unemployment, Non-Farm Payrolls and earnings reports on Friday.
Eurozone data is a little quieter, with Eurozone Retail PMI due for release on Thursday morning and Construction and Retail PMIs from Germany released on Friday.
The Euro to US Dollar (EUR/USD) exchange rate currently trades at around 1.1491, while the US Dollar to Euro (USD/EUR) exchange rate trends within the region of 0.8700.