US Advance Retail Sales Grow but Fail to Meet Forecast
US Advance Retail Sales only grew by half the forecast amount, rising 0.1% to 0.2% in November. The Confidence survey results from the University of Michigan also disappointed, rising from 91.3 to 91.8, undershooting the 92.0 predicted.
Euro Losses Continue Despite Worse-than-Expected US Unemployment
US Initial Jobless Claims and Continuing Claims both rose in November, with 13k new claims being posted instead of the 1k forecast. Continuing Claims rose from 2161k to 2243k. However, the poor performance has been mostly ignored as the change in the medium-importance data was far from large enough to shake Fed confidence in the US economy. The Euro continues to lose ground, slumping to -0.6%.
The European Central Bank (ECB) may have decided that a minimal -0.1% cut to the deposit rate is enough to stimulate the economy but a governing council member has expressed concerns that there are still risks to inflation and growth. The US Dollar is experiencing mixed fortunes across the board, suggesting that perhaps traders aren’t as certain of the economy and the outcome of next week’s Fed policy statement as has been claimed.
Euro to US Dollar Exchange Rate Slumps as Council Hawk Becomes Dove
The Euro is currently sliding against the majority of the major currencies today, partly thanks to a former ECB council hawk taking an uncharacteristically dovish turn. The surprisingly small adjustments to monetary stimulus announced last week – a -0.1% deposit rate cut and an extension to the length of its QE programme into 2017 – signalled that policymakers were confident in the ability of the Eurozone economy to recover.
Governing council member Erikki Liikanen, however, has warned of risks to Eurozone growth and inflation and reminded the world that the ECB is ready to use a range of tools to stimulate the economy should it be required. While cautionary news from a dovish member of the council might cause little stir, a previously confident governor voicing concerns over economic vulnerability has caused bigger ripples and contributed to the Euro slumping.
The Euro is currently down -0.4% against Pound Sterling (GBP) and the Japanese Yen (JPY), -0.5% against the New Zealand Dollar (NZD) and the US Dollar (USD) and -1.2% against the Australian Dollar (AUD).
The EUR/USD exchange rate is currently trending in the region of 1.0964.
USD/EUR Exchange Rate News: US Economy Harmed By Lacklustre Entrepreneurship
Research by a number of bodies – including the Federal Reserve, the US Census Bureau and the University of Maryland – has revealed that the number of US-based high-growth companies has fallen by a considerable amount. The number of start-ups has declined since a previous study carried out in 1999, with fewer companies able to transition into high-growth firms.
According to the study authors: ‘Historically, the US has exhibited a high pace of entrepreneurship with a small share of fast growing young firms disproportionately accounting for job creation and productivity growth. The decline in start-ups and the accompanying decline in high growth young firms either suggests adverse consequences for US economic growth or a change in the way that such growth will be achieved.’
The USD/EUR exchange rate is currently trading between 0.9069 and 0.9120.
EUR/USD Exchange Rate Forecast: Key US Data Day Tomorrow
While there is employment data for the US due out later in today’s European session, tomorrow sees the release of the more important Advance Retail Sales and University of Michigan Confidence survey results. In terms of changing investor outlook on the Federal Reserve’s intended rate hike, the data is unlikely to change much unless it prints extremely poorly, but good or bad news will nonetheless help define EUR/USD movement.
The EUR/USD exchange rate is currently trending between 1.0959 and 1.1021.