EUR/USD is unchanged in the Wednesday session. Currently, the pair is trading at 1.1434, down 0.01% on the day. After a slow start to the week, there are a host events on Wednesday, highlighted by German Preliminary CPI, which is expected to post a decline of 0.9%. In the U.S., the highlight is the Federal Reserve rate statement. The U.S. will release a host of employment numbers during the week, starting off with ADP nonfarm employment. The indicator is forecast to fall sharply to 180 thousand, down from 271 thousand. On Friday, the eurozone releases Preliminary Flash GDP for Q4 and the U.S. publishes Employment Cost Index.
The eurozone economy has slowed in recent months, and Germany has not been immune to softer numbers. There was positive news on Wednesday, as German GfK Consumer Confidence estimating a score of 10.8 for February, higher than the revised reading of 10.5 points for January. The well-respected GfK projected that consumer spending would climb 1.5% in 2019, but warned that a further escalation in the global trade dispute would hurt consumer spending. Last week, German Ifo Business Climate dipped to 99.1, below the 100-level for the first time since 2010. 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.
The Federal Reserve was aggressive in 2018, raising rates by a quarter-point on four occasions. With a nasty trade war dampening global economic growth, it is clear that the Fed will ease up on monetary policy this year. But, by how much? There are a various answers, depending on who you ask. The markets are not expecting any increases this year, while the Federal Reserve continues to stick with a forecast of two hikes. The Congressional Budget Office has also weighed in, saying that it expect further rate increases this year. With no rate move expected at the Wednesday meeting, the markets will be focusing on the tone of the rate statement.
