The Euro to US Dollar (EUR/USD) exchange rate is trending in the region of 1.3345, ebbing between a low of 1.3334 and a high of 1.3383. Movement is around -0.28% which is likely a result of poor German and Eurozone economic sentiment data.
With very little in the way of domestic data scheduled for publication, yesterday was difficult for the Euro as traders used geopolitical information to gauge market movement. With increased uncertainty pertaining to Gaza, Ukraine and Iraq, traders flocked towards safe-haven currencies and avoided those considered risky; such as the Euro.
The story was similar for the ‘Greenback’ (USD) yesterday as, once again, there was very little data to gauge market movement. However investors were more inclined to back the US Dollar, compared with the Euro, for its safe haven qualities.
The Euro softened today against most majors and is likely to continue on that trend as traders digest what has been a less-than-satisfactory day for economic sentiment. The ZEW Survey for Eurozone Economic Sentiment dropped dramatically from the previous figure posted at 48.1 to 23.7. Also the indicator for the current economic situation in the euro area decreased in August by 2.3 points to a value of minus 33.8 points.
Perhaps most important, in terms of the Euro’s softening, is the German ZEW Survey for Economic Sentiment. Decreasing for the eighth consecutive time, the indicator has reached its lowest level since December 2012. The current decline is the strongest since June 2012. Having been forecast to drop to 17.0 points from the previous figure of 27.1, the actual data was a shocking 8.6 points which has led traders to back away from the already dwindling Euro. ZEW connects these poor results with the continued geopolitical unrest seen around the globe.
The US Dollar has remained relatively unchanged in today’s session having had no significant domestic data releases. At 19:00 (GMT) tonight the US Monthly Budget Statement is due for release. It is currently forecast at -$96 billion.
The Euro to US Dollar (EUR/USD) exchange rate has hit a low today of 1.4388.
Forecast for the Euro to USD Exchange Rate
Tomorrow will see some important domestic data released for both currencies within the pairing.
From the perspective of the Euro, the year-on-year German Consumer Price Index (CPI) will be of interest because the CPI is the headline inflation figure that indicates the strength of domestic inflationary pressure. It is forecast to maintain its previous figure of 0.8%. Another important data release to focus on is the year-on-year Eurozone Industrial Production report. It is forecast to drop from 0.5% to 0.2%.
There are several US data releases to watch tomorrow. Perhaps the most important of these to focus on is the Advance Retail Sales data. Consumer spending is vital to the US economy, accounting for more than two-thirds of all economic activity. It is forecast to maintain the previous figure of 0.2%.
Looking further ahead
Thursday will be a pivotal day for the Euro.
There are several data releases on Thursday which will be of paramount importance for European economic standing. The German Gross Domestic Product (GDP) report will be a good indicator of how the Euro will perform in the future, as Germany holds the most weight in the 18-country bloc. GDP is forecast to drop from 2.5% to 1.3%, but any positive result (above forecast) will bolster the Euro exponentially. Of similar importance will be the Eurozone GDP report which does not have a forecast figure.
Friday is the game changer for the US Dollar with several US domestic data releases of varying importance due for publication. Chief amongst these is the University of Michigan Confidence report. Especially valued for its quick turnaround, the University of Michigan Confidence survey is considered one of the foremost indicators of US consumer sentiment. It is forecast to ascend to 82.5 from the preceding figure of 81.8.
The Euro to US Dollar exchange rate (EUR/USD) is currently trending in the region of 1.3352.
EUR/USD Dips after Negative Industrial Production Figures
The Euro to US Dollar exchange rate is currently trending in the region of 1.3360.
Despite having posted positive year-on-year German Consumer Price Index results, which remained faithful to the forecast figure of 0.8%, the Euro has softened against many of the majors today. This is because unimpressive Eurozone Industrial Production figures marred the earlier positivity. Year-on-year Eurozone Industrial Production was forecast to drop from the previous figure of 0.6% to 0.2%. Actual data showed that it has dropped to 0.0%.
Later today will see some significant US domestic data. Look for the Advanced Retail Sales results to shake things up.
Domestic data aside, the ongoing geopolitical tensions are likely to further damage demand for the Euro, and increase demand for the ‘Greenback’ (USD).
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