EUR/USD has posted losses in the Thursday session. Currently, the pair is trading at 1.1521, down 0.46% on the day. On the release front, the sole eurozone indicator is consumer confidence, which is expected to remain pegged at zero points for a fifth straight month. In the U.S, there are two key indicators. The Philly Fed Manufacturing Index is forecast to drop to 28.9 points. As well, unemployment claims are expected to edge up to 220 thousand. On Friday, Germany and the eurozone will release services and manufacturing PMI reports.
The headlines have been dominated by the U.S-China trade spat, which has shaken up the markets and sent the euro lower against the U. S dollar. Currently, EUR/USD is at its lowest level since July 2017. The U.S has also slapped tariffs on steel and aluminum exports from the European Union, setting off alarm bells in Brussels. The eurozone economy is performing relatively well, so much so that the ECB has announced it is winding up its asset-purchase program at the end of the year. The eurozone can ill-afford a trade war with the United States, which would hurt exports, particularly from Germany. The euro is at an 11-month low, as last week’s Federal Reserve rate hike and cautious remarks from Mario Draghi at the ECB Forum have helped propel the dollar higher.
Mario Draghi preached a lesson on prudence and patience from the ECB Forum on Tuesday. Last week, the ECB announced that it was winding up its asset-purchase plan by the end of the year, but added that it would not raise interest rates before next summer. This dovish message sent the euro sharply lower. Draghi said that the ECB will be “patient in determining the timing of the first rate rise”. Draghi also made reference to inflation, saying that “inflation expectations remain well anchored”. However, analysts were quick to note that eurozone inflation has fallen short of the bank’s target of just below 2 percent for five years. Draghi acknowledged that there were external factors which could weigh on inflation, including the threat of global protectionism and higher oil prices. There is also the vexing problem that higher wages have failed to translate into increased inflation. Draghi would like to get through the European Forum without shaking up the euro, and so far he has succeeded.
The headlines have been dominated by the U.S-China trade spat, which has shaken up the markets and sent the euro lower against the U. S dollar. Currently, EUR/USD is at its lowest level since July 2017. The U.S has also slapped tariffs on steel and aluminum exports from the European Union, setting off alarm bells in Brussels over the prospect of a trade battle with the U.S. The eurozone economy is performing relatively well, so much so that the ECB has announced it is winding up its asset-purchase program at the end of the year. The eurozone can ill-afford a trade war with the United States, which would hurt exports, particularly from Germany. The euro is at an 11-month low, as last week’s Federal Reserve rate hike and cautious remarks from Mario Draghi at the ECB Forum have helped propel the dollar higher.
