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Euro US Dollar (EUR/USD) Exchange Rate to be Moved by Mass of Eurozone Data This Week

  • Common currency unsettled by domestic data – Fluctuating results failed to generate lasting confidence
  • US ecostats prove positive overall – Jobs stats exceed expectations
  • US Dollar bolstered by positive employment results – Fed rate hike still seems distant prospect
  • Eurozone inflation stats due this week – US to offer retail sales and confidence stats

The single currency has been a mixed bet over the past week, though multiple chances for redemption will surface in the week to come.

The US Dollar has been a relatively stable option, with repeated positivity in domestic data keeping the appeal of the ‘Buck’ high.

Eurozone Economic News: PMI Printings and Retail Sales Stats Proved Mixed Last Week

The week prior saw a diverse range of economic announcements come out of the Eurozone, which ultimately left the Euro in an uncertain way due to their varied nature.

Eurozone retail sales in May rose on Tuesday on the month and the year, though this was tempered by poor German factory orders results in May that came on Wednesday, along with indecisive retail PMIs for June.

Further German negativity came on Thursday with industrial production data, while Friday’s figures showed the national trade balance dropped in May.

US Dollar Closed Last Week with Better-than-Expected Payrolls Outcome

The value of the US Dollar against peers remained broadly positive last week, on account of a number of positive economic announcements coming in relatively quick succession.

The first of these was Wednesday’s ISM non-manufacturing PMI for June, which rose from 52.9 to 56.5. Following on from this was Thursday’s increasing ADP employment change, as well as Friday’s change in non-farm payrolls outcome, which rose from 11k to 287k.

In less supportive news, however, the Fed’s minutes for their June policy meeting strongly linked a ‘Brexit’ outcome with more cautious economic activity, which implied that a rate hike would not take place in the near-term due to the voting result.

Additionally, the US’s unemployment rate for June rose from 4.7% to 4.9% against forecasts, though economists theorised that this was due to more people actively looking for work, rather than jobs being lost.

A hawkish analysis of Friday’s data came from Capital Economics Assistant Economist Andrew Hunter, who said:

‘Fed officials will want to see evidence of a more sustained recovery in employment growth over July and August as well, but this nonetheless supports our view that the next hike could still be in September’.

Euro US Dollar currency forecast

Future EUR, USD Forecast: German Inflation Stats and US Fed Data due This Week

The week to come is set to bring a broad spread of Eurozone and US economic announcements, with upside risks for both the single currency and the ‘Buck’ over the next five days.

Although a large number of Eurozone production, trade balance and inflation rate stats are due next week, there are two main announcements that investors will be keeping a particularly close eye on.

These will come on Tuesday and Friday; in the former case, Germany, the largest Eurozone contributor, will release its wholesale prices and finalised inflation rate stats for June.

Predictions are mixed for the base inflation rate outcome; a rise on the year and fall on the month have been predicted. Regarding wholesale prices, an ‘improvement’ from -2.3% to -2% on the year is expected.

Friday will focus on the Eurozone as a whole, when the May and June trade balance and inflation rate stats are announced. As of writing, forecasts have been for a dip in the current trade deficit and a shift from -0.1% to 0.1% for the finalised annual inflation rate.

From the US, the coming week will bring the Fed’s Beige Book on Wednesday, as well as the nation’s inflation rate, retail sales and University of Michigan consumer sentiment index on Friday.

Respectively, inflation is expected to remain unchanged but positive, retail sales are forecast to rise on the year and the sentiment score has an expected dip from 93.5 to 92.99 in store.