Euro US Dollar (EUR/USD) Exchange Rate Falls as US Retail Sales Impress
The Euro US Dollar (EUR/USD) exchange rate slumped and the pairing is currently trading at an inter-bank rate of $1.1215.
On Tuesday afternoon, data showed that US retail sales rose higher than forecast in June.
This was the fourth consecutive monthly increase in sales which likely buoyed the US Dollar.
The US Commerce Department showed that retail sales edged up 0.4% in June.
Data showed households increased purchases of motor vehicles and other goods.
This came after May’s downwardly revised increase of 0.4%.
‘Greenback’ sentiment was buoyed as data showed core retail sales jumped by a higher-than-forecast 0.7%.
Today’s data revealed that consumer spending has remained healthy despite increased tariffs on Chinese imports
Euro (EUR) Slides as German Investor Morale Slumps Sharply
On Tuesday morning, single currency sentiment slumped as data revealed that German investor morale slumped sharply once again in July.
The ZEW economic sentiment survey revealed that sentiment among investors fell to a disappointing -24.5 in July.
This was down from June’s reading of -21.1.
Commenting on the data, ZEW President Achim Wambach noted:
‘A lasting containment of the factors that are causing uncertainty in the export-oriented sectors of the Germany is currently not in sight.
‘The Iran conflict seems to be intensifying and the ongoing trade dispute between the United States and China is a burden not only for Chinese economic development.’
US Dollar (USD) Rises as US-China Trade Discussions Continue
China’s Commerce Minister, Zhong Shan has made it clear the US should be held solely accountable for trade tensions.
In an interview published in the People’s Daily, Zhong outlined his ‘Six Plus One’ plan for his ministry.
The US Dollar rose against the single currency as Zhong Shan stated:
‘The ‘One’ is that we need to do a good job in handling the trade conflicts between China and the US. The US has started this economic and trade dispute with us in violation of the principles of the World Trade Organisation – a classic example of unilateralism and protectionism.
‘We must make the best of the spirit of the struggle, and stand firm in defending the interests of our country and the people, as well as the multilateral trading system.’
Zhang Lifan believes that the Commerce Minister’s comments suggest China was preparing for a protracted trade war with the United States.
Zhang stated:
‘The remark is mostly intended for a domestic audience but it clearly shows China is in no hurry to reach a deal and ready for protracted talks.
‘It looks like China is waiting to see what happens after the 2020 election.’
Euro US Dollar Outlook: Will a Dovish Powell Weigh on USD?
Looking ahead to this afternoon, the US Dollar (USD) could slide against the Euro (EUR) following a speech from the Federal Reserve’s Chair Jerome Powell.
If Powell’s tone is overly dovish and hints at an interest rate cut, ‘Greenback’ sentiment could slump.
Looking ahead to Wednesday, the single currency could fall following the release of the Eurozone’s Consumer Price Index (CPI).
If inflation does not rise as high as forecast in June, the Euro US Dollar (EUR/USD) exchange rate may fall.