Euro to US Dollar Exchange Rate Holding Strong Advances amid US Dollar Weakness
Following weeks of limp and weak performance, the Euro to US Dollar (EUR/USD) exchange rate appears to be on track to sustain solid gains this week. A combination of poor US data and global trade concerns is causing US Dollar (USD) losses.
After opening this week at the level of 1.1017, EUR/USD saw mixed movement until a shock contraction in US manufacturing was published.
Since them, EUR/USD has been trending much higher, gaining over half a cent and even briefly touching on a monthly high of 1.1107. At the time of writing on Thursday, EUR/USD is trending near the level of 1.1092.
Demand for the Euro (EUR) has been supported this week by hopes for a Eurozone economic recovery, but the Eurozone outlook remains mixed and the latest data did little to offset economic concerns.
Euro (EUR) Exchange Rates Firm on Rival Weakness despite Underwhelming Data
For most of the week, the Euro has benefitted from a mixture of weakness in its rival, the US Dollar, as well as fresh signs that the Eurozone economy could be recovering from months of slowdown.
While the US Dollar’s losses have been among the primary causes of EUR/USD gains, Eurozone PMI data has beaten forecasts this week, and the data has indicated that things may continue to improve in the Eurozone.
As a result of the weaker US Dollar and the stronger Eurozone data earlier in the week, the Euro was able to hold its ground today despite a slew of underwhelming Eurozone ecostats.
While the key Q3 Eurozone growth projections met forecasts, the day’s other notable Eurozone stats disappointed investors.
German factory orders contracted in October rather than slowing to the forecast 0.3%. Meanwhile, the Eurozone’s final Q3 employment change and October retail sales stats came in below expectations as well.
This data dampened Eurozone recovery hopes slightly, but overall the US Dollar’s weakness remained influential.
US Dollar (USD) Exchange Rates Struggle to Recover amid US Growth Fears
Near the beginning of the week, the US Dollar experienced a sharp selloff as markets reacted to a surprise contraction in the key US manufacturing sector.
As ISM’s manufacturing PMI worsened to 48.1 rather than lightening to 49.2 as expected in November, concerns worsened that the US economy could fall into recession unless there is a recovery in US factory activity.
The US Dollar has been kept under pressure by other factors since then.
Fears that US-China trade talks could collapse are only adding to US manufacturing concerns, and yesterday’s US non-manufacturing PMI from ISM slowed to just 53.9 rather than the expected 54.5.
Some reports have emerged saying that US-China trade talks remain optimistic, but China has not yet responded to US President Trump’s comments saying that a trade deal may not happen for a year. Overall, the US Dollar remains unappealing.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Key US NFP Report
As most of this week’s Euro to US Dollar (EUR/USD) exchange rate gains have been due to US Dollar weakness, the pair could still shed some of this week’s advances if upcoming US data impresses investors.
This afternoon will see the publication of October’s US trade balance and factory orders stats, which could give investors a better idea of how the US economy is performing amid the US-China trade war.
However, tomorrow’s upcoming US data is likely to be even more influential.
US Non-Farm Payroll results from November, due during Friday’s American session, will be closely watched by markets and the Federal Reserve. The US job market report gives economists a better idea of how the US economy is performing overall.
If US Non-Farm Payrolls or the unemployment rate disappoint investors, it could worsen concerns that the US economy could weaken or even fall into recession. This would boost the chances of EUR/USD ending the week higher.
Strong US job stats would help the US Dollar to recover instead.
The Euro may find a little fresh support tomorrow if German industrial production data from October beats forecasts, which could help the Euro to US Dollar (EUR/USD) exchange rate to sustain a week of gains.