EUR/USD Exchange Rate Rangebound as US-China Relations Face Further Challenges
Today, the Euro US Dollar (EUR/USD) exchange rate slipped, before regaining its losses, and is currently trading at an inter-bank rate of $1.1397.
This morning saw the release of the Eurozone’s Consumer Price Index for December, which showed that inflation remained in line with the forecast at a steady rate of 1.6%.
News was released today that China has accused the US of suppressing its high-tech companies, as the US is said to be in advanced stages of inquiry over Huawei’s alleged theft of trade secrets.
Spokeswoman for the Chinese Ministry of Foreign Affairs, Hua Chunying commented:
‘The real intent of the United States is to employ its state apparatus in every conceivable way to suppress and block out China’s high-tech companies.’
This could potentially cause renewed tensions between the US and China, possibly aiding the ‘Greenback’ in pushing higher against the Euro.
Euro (EUR) Weighed Down by Eurozone Slowdown Fears
Yesterday saw the Euro US Dollar (EUR/USD) exchange rate sink, as anxieties about the Eurozone’s economy ran high.
Head of the European Central Bank (ECB), Mario Draghi, emphasised that the Eurozone is not headed for a recession, despite the bloc’s largest economy, Germany, narrowly escaping a technical recession in the second half of 2018.
Draghi, defending the ECB, stated:
‘It’s a slowdown, which is not heading towards a recession but it could be longer than expected.”
December’s Harmonised Index of Consumer Prices remained steady as forecast, sitting at 1.7%, although this could do little to stop anxieties about the Eurozone economy weighing down the single currency.
Euro US Dollar (EUR/USD) Exchange Rate Weighed Down Despite Continuation of US Government Shutdown
News that Chinese Vice-Premier Liu had accepted an invitation to Washington to continue talks with the goal of reaching an agreement to end the trade tensions between the US and China has had the effect of easing global risk.
It is expected that Liu is going to meet Robert Lighthizer, US Trade Representative, and Steven Mnuchin, US Treasury Secretary, during a two-day visit at the end of January.
The US Dollar remained buoyed on the news as the potential end to US-China trade tensions remained in sight.
With the longest US partial government shutdown in history continuing, there has been a delay to US economic data releases, which is likely making it difficult to get a good reading of the US economy.
US government workers have suffered, with around 800,000 workers missing their first paycheque last week.
Around 380,000 workers have been furloughed, the rest working without pay. Despite this, the Dollar has remained up against the Euro towards the middle of this week’s session.
EUR/USD Exchange Rate Outlook: Will Poor US Unemployment Data Bolster the Euro?
This afternoon will see the release of US unemployment data, with the forecasts suggesting joblessness rose at the start of January, although this number could include the number of federal employees that have been furloughed as a result of partial government shutdown.
If there is a significant increase in the initial and continuing US jobless claims it seems likely that the US Dollar could fall against the Euro towards the end of the session today.
On Friday the US industrial production for December is set to be released, with the forecast suggesting that there will be slowed growth compared to the previous month, with industrial production only increasing by 0.2%.
