EUR/USD continues to gain ground this week. Currently, the pair is trading at 1.1432, up 0.03% on the day. On the release front, there are on eurozone or German releases. In the U.S. the key event is CB Consumer Confidence, which is expected to drop to 125.0 points.
As the largest economy in the eurozone, Germany is a bellwether for the rest of the bloc. Recent German numbers have been weak, raising concerns about the strength of the eurozone economy. On Friday, German Ifo Business Climate dipped to 99.1, below the 100-level for the first time since 2010. Earlier in the week, a ZEW survey found that institutional investors remain deeply pessimistic about the German and eurozone economies. There was also grim news from the manufacturing front, as German manufacturing PMI slipped to 49.9, falling into contraction territory for the first time since 2013.
On Monday, ECB President Mario Draghi painted a mixed picture in his testimony before a EU parliamentary committee. Draghi highlighted serious concerns affecting the eurozone. Draghi pointed to uncertainties over geopolitical factors and protectionism threats continued to weigh on the eurozone economy. On the bright side, Draghi noted that an improving labor market and stronger inflation were fueling expansion in the eurozone. At last week’s policy meeting, the ECB said that risks to growth have “moved to the downside”. This pessimistic comments were result of weaker eurozone releases in recent weeks. The economy has slowed, as weaker growth in China and trade tensions, such as Brexit, have dampened business and consumer confidence.
How many times will the Fed raise rates in 2019? The answer varies, depending on who you ask. The markets are not expecting any increases, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office (CBO) has also weighed in, saying that the expect further rate increases this year. The CBO made the forecast in its 10-year outlook update, but did not specify how many hikes. The CBO report projected growth of 2.3% for the U.S economy in 2019, matching the forecast of the Federal Reserve.
