USD/EUR Exchange Rate Rangebound as Caution Rises Following Eurozone Growth
The US Dollar Euro (USD/EUR) exchange rate steadied today and is currently trading around €0.8912 on the inter-bank market.
The Euro (EUR) steadied against the US Dollar (USD) as European banks are closed for the bank holiday, Labour Day, seeing the single currency stabilise following yesterday’s reassuring Eurozone growth figures from Spain and Italy.
However, Marco Valli of Milan’s financial services company, Unicred, remained cautious, saying:
‘The bottom line is that we should cheer today’s quite decent growth numbers, although we should not be carried away. It is still early days.’
With today’s lack of economic data, most single currency traders are focusing on global political developments instead, with the US and China reengaging with trade talks once more.
The UK’s Brexit is also remaining in focus, with the UK Prime Minister, Theresa May, calling for MPs to conclude cross-party talks by the end of next week. This has provided some confidence in the single currency today, as the UK and the EU edge closer to a possible consensus.
The US Dollar, meanwhile, has benefited from today’s publication of the US ADP Employment Change figures for April, which came in better-than-expected at 275K.
USD/EUR Exchange Rate Flat as US Traders Await Fed Interest Rate Decision
US traders will be awaiting the Federal Reserve’s interest rate decision today, which is expected to hold at 2.5%.
President Donald Trump has become increasingly optimism about the US economy, however, saying he’d like to see the Fed slash today’s interest rate by 1% – adding the economy would ‘go up like a rocket’.
Trump also tweeted:
‘China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening.’
US-China trade talks, meanwhile, are also ‘progressing’ according to the US Treasury Secretary Steven Mnuchin, which has left some ‘Greenback’ traders feeling optimism.
This also came after China’s manufacturing figures eased yesterday, which saw many traders flee to safe-haven currencies like the US Dollar and the Euro.
EUR/USD Forecast: ‘Greenback’ Could Weaken on Renewed Risk Appetite
Euro investors will be awaiting tomorrow’s German retail sales figures for March, which are, however, expected to sink against February.
Tomorrow will also see the publication of the German Markit PMI figures for April.
US Dollar traders will be looking forward to tomorrow’s slew of economic data, with the publication of the flash US Nonfarm Productivity figures for the fourth-quarter expected to increase.
These will be followed by US employment figures, with the US initial jobless claims figures for April expected to ease.
The US Dollar Euro (USD/EUR) exchange rate will likely be dictated by ongoing global political developments, and with any signs of a trade deal emerging from US-China trade talks, the ‘Greenback’ could weaken on restored risk appetite.