- Euro (EUR) Boosted by German Data – German Unemployment Reaches Record Low
- Eurozone data prints as expected – Eurozone CPI and unemployment on track
- Update: US Consumer Confidence Disappoints – But other data keeps USD sturdy
- Forecast: Manufacturing Reports Mixed – German figure revised lower
EUR/USD Advances, ECB Decision Ahead
The Euro to US Dollar exchange rate was trending in the region of 1.1203 on Thursday, up slightly on the day’s opening levels.
The common currency was able to push higher despite Germany’s manufacturing PMI being negatively revised from initial estimates and US ISM Manufacturing for May exceeding forecasts.
Hopes that the European Central Bank (ECB) will refrain from hinting at future policy action when it gathers later today have enabled the Euro’s gains, but dovish commentary from the central bank could send the Euro swiftly lower again.
With the decision due shortly, EUR/USD movement may be limited.
Other European news to be aware of includes tomorrow’s final services/composite PMIs for the Eurozone and its largest economies and the currency bloc’s most recent retail sales report.
(Previously updated at 08:30 01/06/2016)
The Euro to US Dollar exchange rate continued to attempt gains throughout Tuesday’s session, briefly hitting a high of 1.1216 before dropping to trend around 1.1138.
Investors seemingly waited for the day’s complete slew of US data to release before they continued to act on the US Dollar, and with most of the news positive the ‘Greenback’ strengthened.
Personal income held at 0.4% as expected, while personal spending improved from 0.0% to 1.0%. The key personal consumption expenditure core report revealed that the monthly figure improved from 0.1% to 0.2% as expected, while the yearly print held at 1.6%.
While May’s US consumer confidence worsened from 94.7 to 92.6 despite forecasts of an improvement to 96.1, the US Dollar was left overall stronger from the session.
Whether or not the US Dollar’s uptrend continues largely depends on how today’s US data prints.
(Published 14:10 31/05/16)
The Euro to US Dollar (EUR/USD) exchange rate trailed lower last week as light Eurozone data failed to keep the shared currency afloat and Federal Reserve policymakers continued to weigh up the chances of a rate hike. Could the pair’s fortunes change this week?
After briefly hitting its highest point of the new week, 1.1176, the EUR/USD exchange rate slipped back to trade in the region of 1.1132.
Euro (EUR) Attempts to Gain as German Data Beats Expectations
Eurozone data could finally be influential enough to cause considerable movement in the Euro this week.
Monday’s session saw the release of France’s preliminary Q1 Gross Domestic Product (GDP) report, which beat expectations by rising from 1.3% to 1.4% year-on-year.
Germany’s preliminary May Consumer Price Index (CPI) came in as expected, strengthening the Euro slightly. The monthly print improved from -0.4% to 0.3% while the yearly score advanced from -0.1% to 0.1%.
Tuesday’s session was even better for German data, with April’s yearly retail sales score improving from 0.6%, past forecasts of 1.7% to 2.3%.
The key German unemployment rate also impressed investors when it was revealed to have dropped from 6.2% to 6.1%, the lowest unemployment rate since the German reunification in the 1990s. The number of unemployed was expected to drop -5k, but instead dropped by an impressive -11k.
Eurozone figures also improved slightly as expected. Eurozone unemployment remained at 10.2%, Core CPI improved from 0.7% to 0.8% year-on-year, and the latest yearly CPI estimate was up from -0.2% to -0.1%.
US Dollar (USD) Sentiment Strengthens on Fed Confidence
Following decent data from the US last week, Federal Reserve policymakers have continued to take on hawkish tones ahead of June’s highly anticipated Federal Open Market Committee (FOMC) meeting.
Friday’s annualised Gross Domestic Product (GDP) figure revealed that growth had beaten the Fed’s initial forecasts of 0.5%. While it did not meet analyst projections of 0.9%, the score of 0.8% was better than initial expectations and helped the US Dollar.
This came a day after April’s preliminary durable goods orders report revealed a surprising jump from 1.9% to 3.4%.
Notably, Federal Reserve policymakers have noted a readiness to hike the key US interest rate, and economists busy themselves betting on whether a June or July hike is more likely.
Fed Chairwoman Janet Yellen spoke on Friday, stating that a rate hike in the coming months would be ‘appropriate’ if the economy’s resilience continues.
This was followed by new comments from St. Louis Fed President James Bullard on Monday, who stated that markets seemed properly prepared for a near-term hike;
‘My sense is that markets are well-prepared for a possible rate increase globally, and that this is not too surprising given our lift off from December and the policy of the committee which has been to try to normalize rates slowly and gradually over time … so my ideal is that if all goes well this will come off very smoothly.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Busy Economic Calendars Ahead
The coming week is set to be vital for the Euro and US Dollar, with the Eurozone and the United States’ economic calendars both stuffed with vital data releases.
Later on in Tuesday’s London session, US personal consumption expenditure figures will be released, followed by May consumer confidence later in the afternoon. Consumer confidence is expected to improve from 94.2 to 96.3, which could strengthen USD sentiment further.
Final May Eurozone PMI is also due this week, with Manufacturing scores set for release on Wednesday morning, followed by US Manufacturing PMI in the afternoon.
The Euro and US Dollar are also likely to move in response to any comments from central bank policymakers, with monetary policy at the forefront of investor attention this week.
The European Central Bank’s (ECB) next policy meeting takes place on Thursday, while US markets are already growing in excitement ahead of the Fed’s 15th of June meeting.
However, industry experts are expecting policymakers to refrain from making any major decisions ahead of the UK’s EU referendum on June 23rd.
While the ‘Remain’ camp currently has the lead in the polls, the situation could change considerably over the next three weeks.
The last UK general election also proved how unreliable poll results can be, so the recent results could be misleading.
The Euro to US Dollar (EUR/USD) exchange rate currently trades at around 1.1132, while the US Dollar to Euro (USD/EUR) exchange rate trends within the region of 0.8981.