Euro US Dollar (EUR/USD) Exchange Rate Muted as OECD Slashes Global Growth Forecasts
The Euro US Dollar (EUR/USD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.1153.
On Tuesday the Organisation for Economic Cooperation and Development (OECD) cut global growth forecasts.
The global economy is now predicted to grow at the slowest pace since 2016.
Meanwhile, the OECD also revealed that the US and China’s growth could be 0.2-0.3% lower by 2021 and 2022 if trade tensions remain unresolved.
Added to this, the global economy is expected to grow by 3.2% in 2019 as growth in trade flows has nearly halved.
However, without taking into account trade tensions, it is predicted the US will outpace other large developed economies.
The Organisation has upgraded its growth forecast to 2.8% from March’s prediction of 2.6%.
US Dollar (USD) Flat as US ‘Underestimates’ Huawei
Overnight the US relaxed some sanctions against Chinese telecoms giant, Huawei which likely eased US-China trade tensions.
Because of this, the company has been given 90 days to purchase American-made goods in order to maintain existing networks and update handsets.
However, the license granted is only temporary.
Meanwhile, in response, Huawei founder, Ren Zhangfei stated that the US ‘underestimates’ its abilities.
He also added that no one could catch up with its 5G technology.
Mr Zhangfei emphasised that the company had already made preparations ahead of US sanctions.
Euro (EUR) Flat Ahead of Parliamentary Elections
The Euro is likely dampened by the upcoming European parliamentary elections in which Eurosceptic parties may be successful.
Success for right-wing Italian parties could lead to new domestic elections in Italy.
As a result of this, a new coalition could be formed of right leaning parties led by Matteo Salvini’s League.
Commenting on this, Strategist at ACLS Global Marshall Gittler said:
‘That would be decidedly negative for the Euro, because Salvini has been much less willing to abide by EU rules – he recently said he’d break the EU’s budget deficit rules if necessary to get employment up.’
Euro US Dollar Outlook: Will a Dovish Fed Weigh on USD?
Looking ahead to Wednesday evening, the US Dollar (USD) could slip against the Euro (EUR) following the release of the Federal Open Market Committee (FOMC) meeting minutes.
If the Federal Reserve believe an interest rate hike in 2019 is unlikely, sentiment in the ‘Greenback’ could be dampened.
Meanwhile, on Thursday morning the single currency could rise against USD following the release of Germany’s final GDP figure for Q1 2019.
If the German economy has expanded more than expected in the first three months of 2019, the Euro US Dollar (EUR/USD) exchange rate could rise.