EUR/USD has ticked higher on Wednesday. Currently, the pair is trading at 1.1171, up 0.08% on the day. On the release front, there are no major German or eurozone events. It’s a quiet day in the U.S. as well. Today’s highlight is the minutes of the Federal Reserve’s policy meeting earlier in May. Thursday will be busy, as Germany releases GDP and Ifo Business Climate. The eurozone and Germany release service and manufacturing PMIs, while the ECB posts the minutes of the April meeting. The U.S. releases unemployment claims.
With a dearth of data so far this week, it’s no surprise that the euro has shown a lack of movement. The currency could get a wake-up call, starting with the release of the Fed minutes later in the day. At the May meeting, the Federal Reserve maintained the benchmark rate for a fourth straight month. The rate statement noted that inflation pressures remain muted and that the FOMC would remain patient regarding future rate movements. Jerome Powell reinforced this stance after the meeting, saying that “we don’t see a strong case for moving in either direction”. Will the minutes point to any bias regarding the next rate move? The Fed is already on record as saying it does not expect to raise rates before 2020, and with inflation levels persistently below the Fed’s target of 2.0%, the Fed can afford to continue its wait-and-see stance.
It’s election time in the European Union, as the bloc contends with an economic slowdown and the U.K’s imminent departure. Voters head to the polls for a 4-day election, beginning on Thursday, to elect members to the European Parliament. Key issues included the economic slowdown, the migrant crisis and the rise in Euroskpeticism. Euro-skeptics increased their representation in parliament from 12% to 25% in the last election, and with the dramatic increase in strength of populist parties, this trend could well continue. A strong showing by parties with an anti-EU agenda could weaken the euro. As well, the outcome of the vote could have an impact on the choice of the new head of the ECB, as Mario Draghi steps down in October, after an eight-year term.
