Euro to US Dollar Exchange Rate Climbs as French Growth Beats Forecasts
Despite continues signs of weakness from Germany’s economy, the Euro to US Dollar (EUR/USD) exchange rate is trending near weekly highs today. Investors are hesitant to buy the US Dollar (USD) ahead of this evening’s Federal Reserve policy decision.
After spending last week tumbling from a monthly interbank high of 1.11 to 1.10, EUR/USD has been edging higher again this week so far.
Due to weakness in the US Dollar, EUR/USD has seen modest gains and is trending in the interbank region of 1.11 again at the time of writing on Wednesday, near its best levels since last week.
While the Euro’s (EUR) support from recent Eurozone data has been mixed, Federal Reserve dovishness is leaving it stronger against the US Dollar.
Euro (EUR) Exchange Rates Supported by French Growth despite Overall Growth Fears
This morning’s Eurozone data continued a trend of painting a mixed economic outlook for the Eurozone.
While the data didn’t do much to keep make the bloc’s economic outlook notably less gloomy, it did come as a relief to some investors to hear that France’s economy was ticking along steadily even as other Eurozone nations slowed.
France’s Q3 Gross Domestic Product (GDP) growth rate projection came in at 0.3% quarter-on-quarter, rather than the expected slow to 0.2%. This was due partially to stimulus from France’s government.
This supported the Euro (EUR) today, but the shared currency’s gains were limited by news that German unemployment was rising more than expected in October, worsening German recession concerns.
German unemployment resumes its rise as the economy battles recession https://t.co/Flqz4HWoa4 via @pgordon66 @sachgau #tictocnews pic.twitter.com/glPj5aCZeb
— Zoe Schneeweiss (@ZSchneeweiss) October 30, 2019
US Dollar (USD) Exchange Rates Jittery as Investors Await Federal Reserve
The US Dollar (USD) has been among this week’s weaker major currencies, as investors are hesitant to buy it ahead of an expected interest rate cut from the Federal Reserve this evening.
In what is set to be the bank’s third US rate cut of the year, markets will be closely watching to see the tone the bank takes on the US economic outlook.
US data has continued to disappoint investors lately, worsening concerns that the US economy is slowing and keeping US recession speculation alight.
Wholesale inventories and Dallas Fed manufacturing data, published on Monday, both fell short of expectations. According to Derek Halpenny, European Head of Global Markets at MUFG London:
‘In the last 4-5 weeks there has been a concern that the consumer part of the market is starting to slow and that could mean more cuts next year,
So what lies ahead post the Fed meeting, the GDP data, payrolls will shape market expectations in addition to what (Fed chief Jerome) Powell will say today.’
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Fed and Key Data
The Euro to US Dollar (EUR/USD) exchange rate’s movement has been fairly modest this week so far, but amid a slew of key news and data expected over the coming sessions the pair could be in for some bigger movement in the coming days.
This evening will see the Federal Reserve hold its anticipated October policy decision, at which it is expected to cut US interest rates for the third time this year. This will be one of the week’s most influential events for EUR/USD.
If the Fed takes a more dovish tone on the US economic outlook, the US Dollar could be in for further losses. On the other hand, a surprisingly hawkish tone could lead to a USD rebound and EUR/USD would tumble.
Key Eurozone and US data due towards the end of the week will also be highly influential.
German retail, as well as Eurozone growth, inflation and unemployment stats will be published tomorrow, with US Personal Consumption Expenditure (PCE) inflation data following in the afternoon.
Then, Friday will follow with US Non-Farm Payroll and manufacturing PMI data from October, which could drive further Federal Reserve speculation and the Euro to US Dollar (EUR/USD) exchange rate.