EUR/USD Exchange Rate Rises as the Eurozone Trade Balances Exceeds Expectations
The Euro US Dollar (EUR/USD) exchange rate is up today and is currently trading around $1.1303 on the inter-bank market.
The Euro (EUR) gained against the US Dollar (USD) following the publication of the Eurozone’s Consumer Price Index figures for March, which came in at 1.0%.
Today also saw the printing of the Eurozone’s seasonally adjusted trade balance figures for February, which increased above forecast to €19.5bn.
This showed that the European Union’s trade surplus with the US had increased during the first two months of 2019, while there was a manifest deficit with China, which has left some analysts concerned over the possibility of increasing global economic tensions.
The US Dollar meanwhile has weakened following the rebound of the Chinese economy today, which has seen many traders flee safe-haven currencies for riskier ones as global growth fears ease.
Tai Hui, a Chief Market Strategist at JP Morgan Asset Management, commented:
‘This confirms that China’s economic growth is bottoming out and this momentum is likely to continue going into months ahead… [R]isk appetite should improve as China’s economic downturn risk is contained.’
USD/EUR Exchange Rate Falls as Geopolitical Tensions Dampen US Business Confidence
The ‘Greenback’ has further weakened as US business tensions within China affecting trade talks between the two countries.
The American Chamber of Commerce in China said in a statement:
‘Crucially, the mood has shifted. The U.S. business community in China, so long an advocate of good bilateral relations, can no longer be relied upon to be a positive anchor.’
Some optimism has returned to the US economy, with David Solomon, Chief Executive of Goldman Sachs saying:
‘I think the US economy is chugging along pretty well. I think the US economy is growing at trend at the moment.’
EUR/USD Exchange Rate Rises as UK Brexit Uncertainty Weighs on the Single Currency
Many Euro traders are awaiting a speech by Sabine Lautenschläger, a member of the European Central Bank’s (ECB) exudative board, later today, and with any bullish comments about the Eurozone’s economy this could see the single currency rise further.
The UK’s Brexit crisis is weighing on the single currency, however, as opposition Labour leader Jeremy Corbyn claims cross-party talks between the Conservatives and Labour were breaking down.
This came after the Belgium MEP, Guy Verhofstadt, criticised British MPs for going on holiday so soon after the EU had granted a long extension to the Brexit process.
Today also saw the EU impose $20bn of tariffs on US goods, which has further exacerbated US-EU tensions.
Cecilia Malmström, the EU Trade Commissioner, commented:
‘European companies must be able to compete on fair and equal terms. The recent WTO ruling on US subsidies for Boeing is important in this respect. We must continue to defend a level-playing field for our industry.’
EUR/USD Forecast: Euro Could Rise Further on US-China Trade Deal
Euro traders will be looking ahead to tomorrow’s publication of the German Markit Manufacturing PMI figures for April, which are expected to improve.
These will be followed by the Eurozone’s flash Markit PMI Composite figures for April.
‘Greenback’ investors, meanwhile, will be awaiting the US Retail Sales Control Group figures for March, which are expected to rise against February’s figures.
The EUR/USD exchange rate will remain sensitive to global political developments, and with any signs of a US-China trade deal emerging, this could weaken the safe-haven ‘Greenback’ as traders jump into riskier assets.