On Friday afternoon, the Euro has seen a small advance against the US Dollar. The pairing opened trading at a rate of 1.1901, later rising to 1.1929.
This strengthening comes as the US Senate goes to the ballot box, with Republicans aiming to pass a vote on sweeping tax reforms in short order.
Despite Donald Trump’s ardent backing of the tax bill, a last-minute critique from the Joint Committee on Taxation has raised the chances of a possible high-profile failure in the Senate.
(First published December 1st, 2017)
The Euro has made a cautious advance against the US Dollar today, thanks to a supportive spread of Eurozone manufacturing figures.
- EUR USD rate rises to 1.1901 – USD EUR rate drops to 0.8402
- Euro rises on impressive manufacturing data – Strong showing across the Eurozone
- USD trades down before major Senate tax vote – US Dollar vulnerable to voting defeat
- Euro could rally on upcoming GDP reading – Will US manufacturing dip damage USD?
The US Dollar hasn’t been far behind the Euro in trading, but has remained down due to growing concerns about future US tax policy.
Euro USD Exchange Rate Rises on Strong Manufacturing Stats
The Euro has seen a minor advance against the US Dollar today, following the news that Eurozone-wide manufacturing has risen in November.
As well as Germany and the overall Eurozone, even struggling Greece has managed to post sector growth during the month.
IHS Markit Chief Business Economist Chris Williamson commented on the results;
‘November’s surveys produced improved PMI readings for all countries, resulting in the best manufacturing performance since the height of the dot-com boom over 17 years ago.
Employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018’.
US Dollar Euro Rate Loses Ground ahead of Crucial Tax Reform Vote
The US Dollar has seen a small decline against the Euro today, having been weakened by trader anxiety.
Concerns are primarily related to a vote on sweeping tax reforms, which is expected to take place in the US Senate later today.
Senate Republicans will be doing their utmost to try and pass a vote on a plan to cut taxes and expand the Federal deficit to compensate for this.
The Republicans have a slim majority in the Senate, however, so there is a chance that they could see a defeat that leads to the US Dollar crashing.
Will Euro US Dollar Rate Rise Higher on Upcoming GDP Stats?
The Euro’s recent advance against the US Dollar could improve even further in the coming week, assuming that Eurozone-wide GDP figures match with forecasts.
The third estimates for Q3 GDP growth are expected to show an upwards revision for the year-on-year reading.
This might raise confidence in the Euro, even if the quarter-on-quarter reading slows as predicted.
Next week’s other notable Eurozone news will be Friday’s German trade balance reading.
Covering trade in October, this is set to show a surplus decline from 24.1bn to 21.6bn.
While such a result might not trigger a Euro rally, it may also not be enough to send the single currency tumbling.
Germany has maintained a sizable trade surplus even after the late 2000’s financial crisis, so a slight surplus reduction won’t be a major setback in the long-term.
The next major US news will be out sooner, when November’s manufacturing PMI is announced this afternoon.
Forecasters believe that sector activity will have slowed during the month, with analysts Markit and ISM both expected to print this outcome.
Slowing manufacturing activity is naturally counterproductive towards economic growth.
As growth is only predicted to slow instead of actually contracting, however, US Dollar losses may be minimal.
Current Interbank EUR USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1912 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8390.