Euro to US Dollar Exchange Rate Avoids Further Losses despite Contraction in German Growth
Despite Germany’s latest growth data showing a quarter of contraction, the Euro to US Dollar (EUR/USD) exchange rate has been able to avoid significant losses and is holding above its weekly lows.
Amid US Dollar (USD) weakness, EUR/USD gained almost a cent and climbed from the interbank level of 1.11 to 1.12 last week.
This week so far, EUR/USD has dipped back into the region of 1.11, but has held above last week’s levels despite persisting weakness in Eurozone data.
Anticipation for upcoming data is keeping the pair from making significant moves, and US-China trade fears continue to bubble in the background.
Euro (EUR) Exchange Rates Edge Higher despite Contraction in German Growth
This morning, Germany’s Q2 Gross Domestic Product (GDP) growth rate projection was published, and as was widely forecast the data showed Germany’s economy contracting -0.1% quarter-on-quarter.
The data wasn’t all gloomy though, as Germany’s yearly growth rate came in at 0.4% rather than slowing to 0.1% as expected. This data helped the Euro to avoid further losses but didn’t boost the German outlook much.
Analysts said that Germany’s economy had been hit by global trade tensions. According to Destatis, the group that compiles the report:
‘The development of foreign trade slowed down economic growth because exports recorded a stronger quarter-on-quarter decrease than imports.’
Germany’s growth outlook remains concerning and recession fears persist, but the Euro also found some support thanks to this morning’s better than expected French unemployment rate report.
US Dollar (USD) Exchange Rates Fail to Capitalise on US-China Trade Concession
Yesterday evening, the US government surprised markets by announcing that select parts of its planned tariffs on Chinese goods would be except from tariffs until mid-December.
The exceptions largely revolved around items that would be bought as gifts in the holiday season, such as phones and toys.
Nonetheless, the news led to a brief surge in trade-correlated assets and the US Dollar (USD). It came as a result of the US and China’s first discussion since the recent escalation of tensions, and caused hopes that relations could still improve.
However, the movement was short-lived. As the tariffs will still be implemented on many other items, and the latest Chinese data has disappointed investors, the US Dollar was unable to keep climbing.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await US Retail Sales Report
Despite this week’s Eurozone data still indicating that Germany could be headed for recession, the Euro to US Dollar (EUR/USD) exchange rate continues to see mixed movement amid US Dollar (USD) weakness.
Concerns that the US economy will be hit by the US-China trade war, as well as rising recession and rate cut speculation in the US, are keeping USD unappealing.
As a result, if upcoming US data shows that US economic activity has been stronger than expected, it could soften US recession and Federal Reserve rate cut speculation and bolster US Dollar demand.
July’s US retail sales report will be published tomorrow afternoon, as will US industrial and manufacturing production stats for July.
Most of the week’s most notable Eurozone data has been published already, but any surprise developments in Italian politics or from Friday’s Eurozone trade balance could also influence the Euro to US Dollar (EUR/USD) exchange rate’s movement.