EUR/USD Exchange Rate Rangebound, Germany’s Economic Concerns Continue
The Euro US Dollar (EUR/USD) exchange rate held steady this morning, with the pairing currently trading around $1.107 after January’s French business climate report rose from 98 to 100, following on from yesterday’s improvement in Germany’s business sentiment.
The improvement in the Eurozone’s second-largest economy, however, has had little impact on the EUR/USD exchange rate, with doubts increasing to rise over Germany – the bloc’s powerhouse economy – as global trade tensions threaten the nation’s reliance on global trade.
Marco Wagner, a Senior Economist at Commerzbank, commented that while Germany’s business confidence survey was a ‘positive surprise’, it nevertheless pointed to ‘an economic stabilization, but not yet a recovery’.
Mr Wagner also highlighted the emerging problem of an escalation between the US and China following the ‘phase one’ mini deal, which, he said, had not fully ‘resolved’ the trade war.
Euro (EUR) investors are, however, remaining cautious ahead of tomorrow’s European Central Bank interest rate decision. Any further indications of a downturn for the Eurozone’s economy, therefore, could weaken the central bank’s economic outlook and dampen appetite in the single currency.
USD/EUR Exchange Rate Steady, Donald Trump’s Impeachment Process in Focus
The US Dollar (USD) steadied against the European currency as US President Donald Trump’s impeachment process continues to leave American markets feeling jittery. But the US Senate, which is controlled by his Republican allies, is not expected to remove Mr Trump from office.
Meanwhile, US-China trade fears are returning to haunt American markets, with the ‘phase one’ trade deal coming under increasing criticism and leaving many ‘Greenback’ traders concerned that the pact between the two superpowers won’t last.
Chad Bown, the Senior Fellow at the Peterson Institute for International Economics, criticised the deal, commenting:
‘While this deal is great in the sense that it has calmed things, additional tariffs aren’t going on, aside from that the deal is essentially a disaster. It doesn’t address any of the systemic issues’.
In US economic news today, we will see the release of the Chicago Federal Reserve National Activity Index for last month, with any signs of improvement providing a boost for the USD/EUR exchange rate.
Today will also see the publication of the US Housing Price Index for November, which is forecast to remain at 0.2%. As a result, the ‘Greenback’ is likely to remain relatively steady against the single currency.
EUR/USD Outlook: Could the ‘Greenback’ Rise on Positive Labour Data?
Euro (EUR) investors will be awaiting tomorrow’s ECB Monetary Policy Statement. Any signs of dovishness from the European central bank would prove EUR-negative.
Tomorrow will also see the publication of the Eurozone’s flash consumer confidence report for January, which is expected to ease by -7.8. Consequently, we could see the EUR begin to slip against the ‘Greenback’ as the bloc’s economic outlook continues to darken.
US Dollar investors, meanwhile, will be paying close attention to tomorrow’s US labour data. Any indication of an improvement in US employment reports, however, would prove USD-positive.