Euro US Dollar (EUR/USD) Exchange Rate Edges Higher as French Industrial Output Slumps Further
The Euro US Dollar (EUR/USD) exchange rate was left muted and the pairing is currently trading at around $1.1124.
On Thursday, the single currency edged up slightly against the US Dollar as data showed the bloc’s construction output rose by 1.2%.
While this was below market expectations and the weakest monthly rise since January, July’s output was upwardly revised to 1.8%.
Data showed that growth in Germany and Spain both slowed, while France’s output continued to decline which likely left the pairing muted.
Meanwhile, Brexit optimism buoyed the single currency as President of the European Commission Jean-Claude Juncker said that the UK and EU had reached a ‘fair and balanced agreement’.
US Dollar (USD) Slides despite US-China Phase 1 Progress
Comments from US Treasury Secretary Steven Mnuchin about the progress of the US-China Phase 1 trade deal sparked an upswing in risk appetite, leaving the safe-haven USD under pressure.
Mnuchin said that both sides were working on securing a text for their presidents to sign next month, and added he was prepared to go to Beijing for further meetings if necessary.
However, he also noted that the administration had made no decision on the planned 10% tariffs due to take effect on 15 December, and stated:
‘We have not gone to the president with any recommendation or any decision – obviously what we were all focused on the October tariffs. We’ll address that as we continue to have conversations.’
Meanwhile, US President Donald Trump was upbeat about trade talks with the European Union and said that Italy backed efforts to reach a wider trade deal that could prevent further tariffs.
The President suggested that Rome could boost its bilateral trade with Washington if the country broke EU rules that ban such deals.
Speaking at a news conference with the Italian President Sergio Mattarella, Trump said:
‘Without the burdens, as unfair as they are, imposed by the European Union, we would actually have a much higher number than $70 billion between Italy and the United States.
‘We’re talking to the president about that [tariff relief] as it pertains to Italy. He thought we were a little bit harsh on Italy and we don’t want to be harsh on Italy. We’ll never do that. So we’ll look at that very strongly.’
US Retail Sales Slump for First Time in Seven Months
On Wednesday, data revealed that US retail sales slumped for the first time in seven months, leaving the Dollar muted against the single currency.
Disappointing retail sales suggested that the manufacturing-led weakness is likely spreading to the wider US economy, suggesting the Federal Reserve could keep the door open to interest rate cuts later this month.
Retail sales dropped by -0.3% in September as households cut back spending.
The report came on the heels of further data showing moderate service sector activity and job growth.
Added to this, the trade war between the US and China has weighed on the economy, causing a recession in the manufacturing sector along with weakened business sentiment.
Commenting on this, chief economist at Stifel, Lindsey Piegza said:
‘This morning’s report solidifies concerns of the consumer’s inability to perpetually support the economy alone. With business investment declining and manufacturing activity deteriorating, many investors brushed off fears of a slowdown because the consumer was still spending.’
Euro US Dollar Outlook: Will Weak Industrial Production Weigh on USD?
Looking ahead to this afternoon, the US Dollar (USD) could slump against the Euro (EUR) following the release of September’s industrial production.
If US industrial production contracts more than expected, it is likely sentiment in the ‘Greenback’ will decrease.
Meanwhile, the Dollar could slide further following speeches from Federal Reserve policymakers later this evening.
If they discuss monetary policy and suggest that the door for further rate cuts this year is still firmly open, the Euro US Dollar (EUR/USD) exchange rate is likely to rise.