EUR/USD is unchanged on Thursday, after sustaining considerable losses on Wednesday. Currently, the pair is trading at 1.1152, down 0.02% on the day. On the fundamentals front, there are no German or eurozone events. In the U.S., durable goods orders is expected to rebound with a gain of 0.7%, after a sharp drop of 1.6% in the previous release. Core durable goods is projected to gain 0.2%. As well, unemployment claims is forecast to rise to 199 thousand. On Friday, the U.S. releases the initial reading for first-quarter GDP, with an estimate of 2.2%. We’ll also get a look at UoM consumer sentiment, which is expected to drop to 97.1 points.
The euro was shaken out of its Easter week slumber on Wednesday, with EUR/USD recording a loss of 0.65%, its sharpest decline since early March. The euro has dropped to a level not seen since June 2017. The sharp drop was triggered by a soft German business confidence release. Ifo Business Climate fell to 99.2, shy of the estimate of 99.9 points. Although the indicator remains close to the 100-level, it has softened considerably since 2018. Investors are nervous about the economic outlook in the eurozone, and the euro is vulnerable to key German releases that miss expectations.
The ECB released its economic bulletin on Wednesday, which provided a somber assessment of the eurozone economy. The ECB took note of the global trade war and the downside risk to the eurozone. The report noted that large negative effects could materialise if “trade tensions were to escalate further. Uncertainty related to protectionism is weighing on economic sentiment and it may raise further, potentially eroding confidence and affecting the euro area and the global economy more significantly.”
The U.S-China trade war continues to weigh on global markets, and the EU and the U.S. are also engaged in a tariff war. The German and eurozone manufacturing sectors have been particularly hard hit, and manufacturing PMIs are mired in negative territory, pointing to a continuing decline in manufacturing
