Euro US dollar (EUR/USD) retreats following German industry releases
The euro US dollar (EUR/USD) exchange rate is edging lower this morning following a mixed batch of German industrial data.
At the time of writing the EUR/USD exchange rate is trading at $1.0915, up approximately 0.2% from this morning’s opening rate.
Euro (EUR) stumbles amid mixed German industry data
The euro (EUR) is fluctuating this morning following the latest German industrial data.
Industrial production in the Eurozone’s largest economy rose more than forecast in June, leaping up by 1.4% rather than a more modest market projections of 1%, and rebounding from the previous month’s downwardly revised 3.1% % contraction.
However, Germany’s trade surplus narrowed more than forecast, slipping to €20.4bn in June. The sharper-than-forecast decline weighed on the export-heavy economy, with the mixed data sending an unclear message.
Carsten Brzeski, Global Head of Macro at ING, said:
‘German industry has been the best example of the entire economy’s problems over the last few years: stuck between cyclical and structural headwinds and finally realising that the old macro business model of cheap energy and easily accessible large export markets is no longer working. This is why even four and a half years after the start of the pandemic, German industrial production is still some 10% below its pre-pandemic level.’
Elsewhere, an increasing appetite for risk leaves the safe-haven euro on the back foot, as investors favour its riskier peers today.
US dollar (USD) falters amid concrete Fed rate cut expectations
The US dollar (USD) is trading without a clear direction this morning with fresh US releases in short supply.
Amid a lack of domestic data, an increasing appetite for risk prevents the US dollar from continuing its recent recovery in the aftermath of a major global selloff.
Lingering concerns of a US recession also serve to undermine the ‘greenback’ this morning, despite some upbeat Federal Reserve commentary in recent days.
While rate-setters have sought to quell worries of deterioration in the superpower economy, markets appear largely unconvinced, and continue to place firm bets on a September rate cut by the Fed.
Steven Blitz, Chief US Economist at TS Lombard, is amongst those warning clients that further delays to Fed intervention could fuel US recession woes, stating:
‘In sum, no recession today, but one is increasingly inevitable by year-end if the Fed fails to act. But they will, beginning with a [half percentage point] cut in September telegraphed in late August.’
A lack of high-impact US data throughout the remainder of the session may leave USD to face headwinds, as cheery trade further pressures USD exchange rates.
Euro US dollar exchange rate forecast: US jobs data in focus
Looking ahead, the release of the latest initial jobless claims report in the US could sink USD tomorrow afternoon. Should the number of US citizens claiming unemployment benefits hold close to a one-year high, further signs of a destabilising US labour market could dent USD.
Additionally, Fed Thomas Barkin is due to speak tomorrow evening. Could a convincingly hawkish tone lend USD modest support?
A lack of immediate data in the Eurozone could see EUR left vulnerable to market sentiment, as markets brace for Geramy’s looming inflation release, due out on Friday.