Euro US Dollar (EUR/USD) Exchange Rate Muted as Millions More Americans File for Unemployment
The Euro US Dollar (EUR/USD) exchange rate remained flat this afternoon, leaving the pairing trading at around $1.0980.
Renewed tensions between the United States and China weighed on global market sentiment, offering the safe-haven USD support.
Global risk appetite also suffered after millions more Americans filed for unemployment benefits last week.
Data revealed backlogs of claims continue to be cleared and complications from the coronavirus pandemic sparked a second wave of layoffs.
This suggests May could suffer another month of staggering job losses, painting a dire picture for the world’s largest economy.
Commenting on the job losses in the US, Glassdoor’s senior economist, Daniel Zhao noted:
‘Today’s sky-high unemployment insurance claims report brings the total UI claims to 38.6 million and surpasses yet another historical benchmark. In only nine weeks, unemployment claims made during the coronavirus crisis have already exceeded the 37 million claims made over the entire 18 months of the Great Recession.
‘The coronavirus crisis continues to inflict swift and deep impacts on the labor market at a near unprecedented clip.’
Euro Steadies After Four Days of Gains
The single currency steadied today after four straight days of gains, fuelled by optimism of a closer fiscal union in the Eurozone.
However, this optimism soon fizzled out and risk appetite was hit with increasing US-China trade tensions and weak economic data.
The Euro eased today after fresh PMI data revealed the catastrophic impact of the coronavirus on the bloc’s economy.
While flash PMIs improved slightly in May as governments across the bloc eased lockdowns, figures were still firmly in contraction territory.
The Eurozone’s PMI composite recovered to 30.5 in May after April saw the bloc’s PMI composite plummet to its lowest reading in the survey’s 22-year history.
Commenting on this morning’s data, Markit’s Chief Business Economist, Chris Williamson noted:
‘The Eurozone saw a further collapse of business activity in May but the survey data at least brought reassuring signs that the downturn likely bottomed out in April.
‘Second quarter GDP is still likely to fall at an unprecedented rate, down by around 10% compared to the first quarter, but the rise in the PMI adds to expectations that the downturn should continue to moderate as lockdown restrictions are further lifted heading into the summer.
‘All Eurozone countries eased their COVID-19 containment measures to some extent in May, helping to moderate the overall rate of economic decline.’
Euro US Dollar Outlook: German GDP and Business Climate in Focus
Looking ahead, the Euro could start next week on the backfoot after the release of final German GDP data.
If Germany’s final growth rate shows the country went into a recession in the first quarter, the single currency will slide.
Added to this, if Germany’s business climate does not rise as high as forecast, EUR will fall.
If Germany’s business climate continues to suffer due to the coronavirus pandemic it will weigh on the the Euro. This willl send the Euro US Dollar (EUR/USD) exchange rate lower.