EUR/USD Exchange Rate Rangebound on Fears of Rising US Unemployment
The Euro US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.093 as September’s US ADP employment change figure fell below forecasts from 157,000 to 135,000.
Mark Zandi, Chief Economist at Moody’s Analytics, commented on the US jobs data:
‘Businesses have turned more cautious in their hiring. Small businesses have become especially hesitant. If businesses pull back any further, unemployment will begin to rise.’
As a result, the US Dollar (USD) failed to edge higher against the Euro (EUR) today as the US economy continues displaying signs of a slow-down.
Today’s data follows yesterday’s release of the US ISM Manufacturing PMI for September which fell to a decade low of 47.8, further exacerbating fears for a recession in the world’s largest economy.
Martin Rudings, an Analyst at OMF, commented:
‘The reality check is that the data that came out last night still puts the chances of the [US Federal Reserve] cutting rates at 50-50 and if it is data dependent then the data is starting to turn a bit.’
EUR/USD Exchange Rate Holds Steady as PM Announces Brexit Deal Proposal
The Euro failed to gain on the US Dollar today following a lack of Eurozone economic data and a focus on Brexit. This follows today’s keynote speech by Prime Minister Boris Johnson in which he outlined a new Brexit deal.
Mr Johnson stressed that the proposal was fair, saying that he now expects the EU to ‘compromise in their turn’.
Nevertheless, Simon Coveney, Ireland’s Deputy Prime Minister, was sceptical:
‘Essentially, if he’s proposing customs checks on the island of Ireland I don’t think that’s going to be the basis of an agreement. But let’s wait and see the detail on that before we make a full judgment on it.’
After yesterday’s poor Eurozone economic data, the single currency continues to tread water against its US counterpart.
EUR/USD Outlook: Could the Euro Rise on UK-EU Brexit Deal?
US Dollar traders will be looking ahead to tomorrow’s release of September’s ISM non-manufacturing PMI, which is expected to ease from 56.4 to 55.
Tomorrow will also see the release of September’s US jobs data with any sign of improvement likely to prove USD-positive.
Meanwhile, Euro traders will be looking ahead to tomorrow’s release of the Eurozone’s retail sales for August, which are expected to ease slightly from 2.2% to 1.9%.
Tomorrow morning will also see a speech by Luis De Guindos, the Vice-President of the European Central Bank (ECB). Any dovish comments about the European economy could see the Euro begin to fall against the ‘Greenback’.
The UK’s Brexit developments are likely to drive the EUR/USD exchange rate over the course of this week, with signs of a deal emerging between the UK and the EU likely to bolster confidence in the European currency. Meanwhile, any further signs of the US economy falling further toward recession could cause the US Dollar to sink.