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Strong US Labour Market Leaves Euro US Dollar (EUR/USD) Exchange Rate Flat

Euro US Dollar (EUR/USD) Exchange Rate Muted as US Existing Home Sales Jumps to 17-Month High

UPDATE: The Euro US Dollar (EUR/USD) exchange rate remained muted this afternoon, and the pairing is currently trading around $1.1049.

This afternoon, data revealed that the number of Americans filing for unemployment did not rise as high as expected.

This suggests the labour market remains strong and should continue to support the economy and allow it to continue growing at a moderate pace.

Meanwhile, US existing home sales jumped to a 17-month high in August, registering gains for the second month in a row.

The National Association of Realtors revealed existing home sales jumped by a better-than-expected 1.3% despite a forecast drop.

While this proved to be another sign that lower mortgage rates were encouraging buyers, it could do little to buoy the Dollar after the Fed slashed rates on Wednesday.

Euro US Dollar (EUR/USD) Exchange Rate Rises as Fed Slashes Rates

The Euro US Dollar (EUR/USD) exchange rate edged up and the pairing is currently trading at around $1.1062.

On Wednesday, the US Federal Reserve slashed interest rates for the second time this year, to help sustain the record-long economic expansion.

Fed Chair Jerome Powell described the US economic outlook as ‘favourable’ and added the cut was ‘to provide insurance against ongoing risks’ such as trade tensions and weakened global growth.

The Dollar struggled to move higher against the Euro as the bank offered mixed signals about the future of monetary policy.

While Powell did not rule out future cuts, his tone was not as dovish as markets had anticipated.

However, the bank forecast 2.2% growth this year, faster than they had predicted earlier in June.

US Dollar (USD) Falls as US Housebuilding Surges to 12-Year High

Meanwhile, the Dollar edged lower despite as housebuilding rising to a 12-year high in August.

Both single and multi-family housing construction increased, which suggests lower mortgage rates were providing the struggling housing market with a much-needed boost.

Commenting on Wednesday’s data, executive vice president at TIAA Bank, John Pataky noted:

‘A prolonged period of lower mortgage rates has perhaps finally encouraged prospective homebuyers to get off the sidelines.

‘I’d like to see a couple more months of data like this before I’m convinced the market’s fortunes have really changed.’

With housing and manufacturing being weak spots in the US economy, permits for future home building jumped to levels last seen in 2007.

Added to this, a survey on Tuesday revealed confidence among homebuilders increased in September.

However, they noted that labour and scarce building lots along with trade tensions put pressure on the sector.

It was noted that this was ‘holding back home construction in some parts of the nation’.

Euro (EUR) Edges Up despite Weak Eurozone Inflation

The Euro rose on Thursday despite Wednesday’s disappointing inflation data.

The Eurozone’s inflation rate remained steady in August, at its lowest level in close to three years.

Month-on-month inflation edged up 0.2%, missing market expectations and the annual Consumer Price Index (CPI) rose by 1%.

Meanwhile, the single currency was left under pressure following a speech from the European Central Bank (ECB) Vice President, Luis De Guindos.

He noted that as long as inflation fails to meet the bank’s target, the ECB will not raise interest rates.

De Guindos also added that economic risks to the bloc remain tilted to the downside.

Euro US Dollar Outlook: Will Disappointing German PPI Weigh on EUR?

Looking ahead to this afternoon, the US Dollar (USD) could continue to slide against the Euro (EUR) following the release of July’s existing-home sales data.

If US home sales slump further than expected, the ‘Greenback’ could be left under pressure.

Meanwhile, the Dollar could claw back some losses on Friday if German inflation disappoints.

If August’s Producer Price Index slumps, it is likely the Euro US Dollar (EUR/USD) exchange rate will fall.