EUR/USD Rallies on Friday Amid Poor US Data
While investors previously held their positions on EUR/USD, they appear to be moving in the Euro’s favour after Friday’s US data proved to be underwhelming for the ‘Greenback’.
The pair climbed around 0.4% and trended in the region of 1.1308 on Friday afternoon in response to the highly anticipated preliminary University of Michigan consumer sentiment report, which scored a disappointing 89.7 despite forecasts that it would improve from 91.0 to 92.0.
Industrial production in the States also worsened by -0.6% in March, underwhelming estimates that it would print at -0.2%.
EUR/USD Flat on Poor US Data
Investors seem dispirited by both the Euro and US Dollar today, but the weakened EUR looked slightly preferable to the ‘Greenback’ as expectations for US CPI failed to be realised.
EUR/USD dipped slightly today, but its declines were minimal as US CPI scored a disappointing 0.9% year-on-year despite forecasts that it would improve from 1.0% to 1.1%.
Eurozone CPI fared better, leaving contraction to score a better-than-expected 0.0%.
Disappointment in the US result may have been slightly offset by US jobless claim data, which showed a drop in continuing jobless claims from 2.18m to 2.17m.
- Eurozone Industrial Production Poor – Negative print hurts Euro (EUR)
- US Dollar Up Despite Bad Data – Retail sales scored an unexpected contraction
- CPI Anticipation Inspires ‘Buck’ Strength – Investors expect strong US data today
- Forecast: CPI Results to Move EUR/USD – All eyes on inflation prints
The Euro to US Dollar (EUR/USD) exchange rate ended its steady streak on Wednesday as investors began to gear themselves up for today’s data releases in hopes they could improve Fed rate hike bets.
The EUR/USD pair lost -100 pips during Wednesday’s session. Its descent has since slowed, and the pairing trends just down from the day’s opening levels at 1.1263.
Euro (EUR) Weakening on Poor Data and CPI Anxiety
It’s been a bad week for the Euro thus far as various factors pile on the pressure. The European Central Bank (ECB) itself seems to be embroiled in rows this week as various economists around the Eurozone argue for and against the bank’s extreme easing measures.
Euro favour worsened yesterday when February’s Eurozone industrial production data was released, showing an unexpectedly large drop from 2.9% to 0.8% and undercutting less bearish forecasts of 1.3%.
The figure inspired caution in investors who had spent the last week perusing the ECB’s minutes to understand how dire the Eurozone’s economic future is looking.
Investors have since fled the Euro in favour of the more sturdy ‘Greenback’ as they feared Eurozone Consumer Price Index (CPI) data may be poor enough to prompt further ECB easing measures.
Eurozone CPI printed optimistically despite fears, with the month-on-month release scoring the expected 1.2% and the key year-on-year figure of 0.0% escaping contraction despite predictions that it would merely narrow from -0.2% to -0.1%.
Hopeful Investors Strengthen US Dollar (USD) Ahead of March CPI
A slew of poor data during Wednesday’s session was unable to weigh on the strengthening US Dollar as investors began to take the Federal Reserve’s praise of the economy to heart.
Investors flocked to the US Dollar throughout Wednesday in hopes that CPI reports due for release today would show optimistic inflation figures and improve the outlook for Fed interest rate hikes in 2016.
This movement happened despite poor US retail sales data being released yesterday afternoon. The key retail sales print entered negative territory of -0.3% instead of rising to 0.1% as expected, with other retail sales and PPI figures below forecasts across the board.
Crude oil inventory data may have helped offset any disappointment towards the consumer spending data, as the April 8th report scored 6634k from the previous figure of -4937k, a massive jump.
US crude oil inventories are also likely to have created slight risk-off sentiment as oil prices plunged in response, pushing investors to seek out the ‘safe-haven’ US Dollar.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: All Eyes on US Inflation Today
While optimistic Eurozone CPI may have helped the Euro to bolster its defences and potentially mute losses, the pair is unlikely to move considerably until the United States’ own indication of inflation is released later today.
In what is set to be a big day for US data, the key figure will be accompanied by jobless claims data for April and average weekly earnings data for March.
If the datasets release positively the EUR/USD pairing is likely to plummet as Fed rate hike bets increase, but a worse-than-expected session would send the pair soaring on this morning’s positive Eurozone CPI.
Eurozone data is now set to be quiet for the remainder of the week, though investors are likely to eyeball an ECB survey of professional forecasters set for release tomorrow.
The Euro to US Dollar (EUR/USD) exchange rate currently trends in the region of 1.1263, while the US Dollar to Euro (US/EUR) exchange rate trends at around 0.8876.