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Euro Rises against US Dollar after ECB’s Praet Targets Trump’s ‘Simple’ Economics

Friday’s Euro to US Dollar trading has started off on a low but positive note, with the Euro advancing by a minor amount in the pairing.

Eurozone news has shown French consumer confidence rise in February, while the last US data on Thursday saw the Kansas Fed manufacturing activity score drop form 20 to 11.

Incoming Eurozone data will cover Italian consumer and business confidence in February, while later US data will consist of a University of Michigan confidence score and new home sales for January.

The Euro could remain in its current strong position going into the weekend, given that the Michigan confidence score is expected to drop and Italian confidence is forecast to rise.

[Last updated 16:58 23/02/2017]

The Euro has managed to break free from earlier flat trading against the US Dollar today, rising by 0.3%.

This comes after comments about the US from European Central Bank (ECB) official Peter Praet, who has warned;

‘This global [economic] system can go into a very vicious circle if you go into simplistic narratives. The signals we have got from the new [US] president have been very worrying because they are simple narratives with complex stories behind’.

Whether this simplicity in Trump’s narratives ends up costing the US economy remains to be seen, but with official criticism mounting, the new US administration is finding itself increasingly tasked with proving itself on the world stage.

[First Published 13:52 23/02/2017]

Broadly disappointing German confidence and GDP figures might have weakened the Euro against the Pound, but the common currency was little changed against a struggling US Dollar.

The Euro US Dollar exchange rate has been flat today following the release of Germany’s GfK consumer confidence score for March. This had been predicted to drop from 10.2 to 10.1, but ultimately proved worse than expected by falling to 10 points.

Other German economic upsets included annual finalised Q4 GDP dropping to 1.2%, instead of rising from 1.5% to 1.6% as expected.

Cementing the Euro’s inability to rise against the US Dollar has been European Central Bank (ECB) official Peter Praet, who warned;

‘Despite the resilient recovery in the Euro area and strong indicators of confidence across all sectors, measures of political and policy uncertainty have been rising recently’.

Holding back the US Dollar today has been the recently-released minutes from the last Federal Reserve policy meeting.

Investors have been put off by ambiguity in the Fed minutes; while many officials saw fit to raise the US interest rate ‘fairly soon’, the minutes also showed that;

‘The Committee might need to change its communications regarding the anticipated path for the policy rate if economic conditions evolved differently. They pointed to a number of risks that, if realized, might call for a different policy trajectory than they currently thought most likely to be appropriate’.

This is broadly thought to refer to President Donald Trump, whose sporadic and often controversial policy decisions threaten to keep the Fed in a cautious state when it comes to future US interest rate decisions.

Peter Praet is expected to remain an influence on Euro demand today as he is due to give another speech at the Official Monetary and Financial Institutions Forum this afternoon.

Following this on Friday will be French and Italian consumer confidence scores for February, along with an Italian business confidence score; No change is predicted for the French figure, but a rise in the Italian measure has been forecast.

This afternoon’s USD-influencing data will include initial and continuing claims figures for February, along with a speech from the Fed’s Dennis Lockhart.

Moving into Friday, the University of Michigan consumer sentiment score is expected to have fallen in January while new home sales are forecast to have risen substantially from -10.4% to 7.2% in the same month.

Current EUR USD Interbank Exchange Rates

At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.05 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94 today.