EUR/USD Exchange Rate Rangebound, German Consumer Confidence Rises
The Euro US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.101 after December’s GfK consumer confidence survey beat forecasts and rose from 9.6 to 9.7 amid increased economic expectations.
Rolf Buerkl, GfK’s Consumer Expert, was upbeat in his analysis, saying:
‘The exceptionally high levels of consumer confidence among German consumers have significantly contributed to preventing a recession in Germany in the third quarter.’
With the German factory sector remaining in recession, however, the EUR/USD exchange rate failed to rise today due to ongoing concerns for the Eurozone’s powerhouse economy.
Philip Lane, Chief Economist at the European Central Bank (ECB), said yesterday that the bank’s policymakers could adjust all of its instruments and that it would remain in the bond market for the long-term.
Mr Lane commented:
‘It [rise in yields] shows that there is a little bit less pessimism [about the Eurozone’s economy]. The best guide might be what we did in September, which was a little bit of everything… [A]ll market instruments could be adjusted.’
USD/EUR Exchange Rate Steady, US-China Trade Deal Optimism Clips Safe-Haven ‘Greenback’
The US Dollar (USD) failed to gain on the Euro (EUR) today as US-China trade deal optimism continues to weigh on demand for the safe-haven ‘Greenback’.
This came after China’s Ministry of Commerce stated:
‘Both sides discussed resolving core issues of common concern, reached consensus on how to resolve related problems (and) agreed to stay in contact over remaining issues for a phase one agreement.’
As the two superpowers are looking increasingly set to secure a ‘phase one’ trade deal, investors are fleeing the safe-haven USD and seeking out riskier assets instead.
In US economic news, today will see the release of September’s US housing price index, which is expected to rise by 0.2%. As a result, we could see the ‘Greenback’ begin to gain on rising optimism over the US economy’s returning strength.
Today will also see a speech by Lael Brainard, a member of the Board of Governors at the Federal Reserve.
Any dovish commentary about the state of the US economy could begin to weigh on the USD/EUR exchange rate.
EUR/USD Outlook: US Growth Figure in Focus
US Dollar (USD) investors will be awaiting tomorrow’s release of the flash annualised US GDP figures for the third quarter, which are expected to hold at 1.9%. However, any unexpected growth in the US economy would benefit the USD/EUR exchange rate.
Tomorrow will also see the release of October’s US goods orders figures, which are expected to ease by -0.3%, potentially clipping some of the ‘Greenbacks’ gains.
Euro (EUR) traders will be awaiting ECB Governor Philip Lane’s speech tomorrow, with any further indications about possible stimulus measures from the central bank weakening the EUR/USD exchange rate.