USD/EUR Exchange Rate down after US Trade Deficit ‘Worst in 10 Years’
The US Dollar Euro (USD/EUR) exchange rate is down today, and is currently trading at €0.8785, as the US trade deficit showed the biggest fall in ten years.
This news arrived as US and China trade tensions flared up over the arrest of Chinese tech giant Huawei’s Chief Financial Officer, Meng Wanzhou, was arrested in Vancouver, Canada.
Christopher Balding, a China expert at Fulbright University, commented:
‘You have to see this as a significant escalation in the trade war.’
Meanwhile the Euro (EUR) remained strengthened by yesterday’s release of the Eurozone’s services PMI for October, which showed a better-than-expected increase.
Yesterday also saw the release of October’s Eurozone retail sales figures, which also showed an increase on September.
USD/EUR Exchange Rate Struggles as Employment Figures Drop
USD was further dented today by the release of ADP’s US employment change figures, which showed a decrease at 179K – down -46K on November’s figures.
This was soothed somewhat by a decrease in jobless claims.
The release of today’s Q3 non-farm productivity figures also showed an increase of 2.3%, which is a 0.1% increase on the previous quarter.
November’s Markit PMI figures also increased, which show 54.7, an increase of 0.2 on October.
The US Dollar (USD) was however hit by factory order figures for October, which showed a significant decrease at -2.1% against September’s 0.2%, further raising market concern for the US economy.
Euro US Dollar (EUR/USD) Exchange Rate up despite Lingering Italian Budget Uncertainty
The Euro (EUR) meanwhile is awaiting developments from Italy’s Prime Minister Giuseppe Conte as he continues to revise his country’s budget in accordance with the European Commission’s deficit rules.
EUR investors remain cautious as EC President Jean-Claude Juncker and Conte have spoken, but – as Juncker’s spokesman has confirmed – ‘no meeting was scheduled.’
Brexit still remains a top concern for investors in the single currency, with British Prime Minister Theresa May rallying to bolster support for her UK-EU withdrawal deal, despite mounting pressure coming from Parliament.
However, EUR has benefited from the announcement by the European Court of Justice that the UK could effectively reverse Brexit by unilaterally revoking Article 50, softening concerns of a ‘chaotic’ Brexit.
USD/EUR Outlook: US-China Trade Tensions Remain in Focus
The USD/EUR exchange rate is likely to remain driven by political factors in the coming week as US-China trade tensions once again show signs of flaring up.
And as EUR investors await further news on both Brexit and Italy’s budget the pairing could see some significant changes ahead.
Tomorrow will see a slew of USD ecostats, with ‘Greenback’ investors paying particular attention to the release of non-farm payrolls for November, with an expected decrease potentially dampening market confidence in the US labour market and wider economy.
Also tomorrow is the release of November’s average hourly earnings which are expected to remain the same.
This will also be followed by the release of November’s durable goods figures, which are expected to decrease.