Euro US Dollar Exchange Rate News: EUR/USD Climbs to One-week High as Safe-Haven Demand Destroyed by US-China Trade Optimism

EUR/USD Exchange Rate Accelerates as Trump Confident of US-China Trade Deal

Following on from Thursday’s solid gains, the Euro to US Dollar (EUR/USD) exchange rate continues to trend higher this morning, aided by cautious optimism that the US and China may be close to striking a trade deal.

At the time of writing EUR/USD exchange rate is up 0.4% so far this morning, with the pairing have rallied over a cent from Wednesday’s lows to trade at an inter-bank rate of $1.144.

US Dollar (USD) Exchange Rate Slides as Trade Prospects Brighten

The US Dollar (USD) has come under considerable pressure in the second half of this week’s session – a trend which looks set to continue today as safe-haven demand remains under pressure following cautious optimism that the US and China may be close to reaching a trade deal.

This was initially prompted by a tweet from US President Donald Trump late on Thursday in which he spoke of a ‘long and very good conversation’ with Chinese president Xi Jinping regarding trade.

However it appears to be reports from Bloomberg, which suggest that Trump wants to reach a trade deal with China at the G20 summit in Argentina later this month, that have really excited markets and led to investors flocking to more risk-sensitive currencies.

Euro (EUR) Exchange Rate Gains Trimmed BY Weaker-than-Expected Manufacturing PMI

Meanwhile the Euro (EUR) has edged back from its best levels this morning, following the release of the Eurozone’s final manufacturing PMI reading for October.

According to data published by IHS Markit, the bloc’s manufacturing index slipped from 52.2 to 52 last month, falling slightly below the preliminary reading of 52.1 and striking a 16-month low.

The slowdown appeared to be largely due to falling business optimism, with Brexit and trade uncertainty leading to a slump in new orders and exports as consumers become increasingly nervous.

Most worrying however is the speculation from analysts that October’s survey could indicate a possible contraction in manufacturing growth in the coming months.

Chris Williamson, Chief Business Economist at IHS Markit, explains:

‘The survey suggests that the manufacturing sector could contract in the fourth quarter unless the data revive in coming months.

‘However, with backlogs of work falling for a second successive month, and business expectations sliding to the lowest for nearly six years, risks seem firmly tilted towards the downside heading towards the end of the year.’

EUR/USD Exchange Rate Forecast: Will Strong Payroll Figures Allow the US Dollar to Reverse Course?

Looking ahead, the Euro US Dollar (EUR/USD) exchange rate could face some pushback later this afternoon as the US publishes its latest labour figures.

While the US unemployment rate is expected to remain unchanged at a 49-year low of 3.7% last month the US dollar may look to recoup some ground if there is a solid rise in non-farm payrolls in October, as expected.

Meanwhile EUR investors will now turn their focus towards next week and the release of Germany’s latest industrial data.

This may result in the Euro giving some ground in the upcoming session as both German factory orders and industrial production are forecast to have contracted in September, something that bodes poorly for the release of Germany’s third quarter GDP figures later in the month.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail