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Rising German Confidence Pushes Euro to US Dollar Rate Higher

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Disappointing US data has pushed the EUR/USD exchange rate higher on Friday afternoon, up to the region of 1.1935.

This advance has been triggered by the US PMI readings for November, which showed slowdowns instead of growth as predicted.

Analysts still said that these were strong growth figures, but the damage was severe enough to allow a quick Euro to Dollar rise.

(First published November 24th, 2017)

The Euro has made a small advance against the US Dollar today, thanks to reports of rising optimism about the German economy.

  • EUR USD trades higher at 1.1872 – USD EUR rate down at 0.8420
  • Euro firms on IFO confidence scores – IFO President praises German economy
  • US Dollar weakens on tax plan criticism – Independent body blasts future tax reforms
  • Are further Euro gains ahead on ECB speeches? – US Dollar could rally on PMI readings

US Dollar traders have been focused on political news, which threatens to jeopardise Republican efforts to implement sweeping national tax reforms.

Rising German Confidence Enables EUR USD Rate Rise

The Euro has been supported by German data today, which has shown rising confidence about most areas of the economy.

The IFO business climate survey score has risen from 116.7 points to 117.5, while the expectations index has also increased from 109.1 to 111.

This has been especially good news because it comes despite recent political upsets in the German government.

Responding to the news, IFO President Clemens Fuest said;

‘Sentiment among German businesses is very strong.

This was due to far more optimistic business expectations. The German economy is on track for a boom’.

US Dollar EUR Rate Dips as Traders Consider Tax Reform Obstacles

The US Dollar has dropped against the Euro and Pound today, following an alarming development in plans for US tax reform.

While the tax reform bill has passed an initial hurdle in the House of Representatives, it still needs to gain Senate approval.

The latest news has been negative, with three groups critiquing the potential impacts of the bill.

One particularly vocal critic has been the Urban-Brookings Tax Policy Center.

The group believes that while there would be an initial boost to the incomes of average US citizens, by 2027 over half of households would actually see their taxes increase.

EUR USD Outlook Positive on Upcoming ECB Speeches

Although the day’s biggest Eurozone data is now out, the Euro could still be influenced today by European Central Bank (ECB) speeches.

ECB official Danielle Nouy will be giving remarks this morning, while Vitor Constancio and Benoit Coeure will be speaking in the afternoon.

Coeure bears close watching, as he struck a hawkish tone on ECB monetary policy earlier in the week.

If he repeat his progressive outlook today then the Euro could advance, as this could point to a change of sentiment across ECB policymakers.

The week’s last major US news will be out this afternoon and could push the US Dollar back up against the Euro.

If the US PMI estimates for November grow as expected, the USD/EUR exchange rate could rise.

The US manufacturing and services sectors are tipped to show growth, which could further support a December interest rate hike from the Federal Reserve.

Current Interbank EUR USD Exchange Rates

At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1872 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8420.