EUR/USD remains under pressure and has edged lower in the Thursday session. Currently, the pair is trading at 1.0740. On the release front, key releases out of the eurozone and the US could shake up the euro on Thursday. Germany will release Preliminary CPI, which is expected to soften to 0.4%. The US will publish Final GDP and unemployment claims. Final GDP is expected to edge up to 2.0%, compared to Preliminary GDP which came in at 1.9%. On the labor front, unemployment claims is expected to improve to 244 thousand, after an unexpectedly high figure of 261 thousand last week. On Friday, Germany releases retail sales and unemployment claims. The eurozone will publish CPI Flash Estimate while the US releases UoM Consumer Sentiment.
It’s been a busy week for the euro. The currency jumped above the 1.09 level on Monday, its highest level since November 2016. However, it’s been all downhill since then, as the euro struggles to stay above the 1.07 line. EUR/USD posted strong gains following President Trump’s failure to pass health legislation to replace parts of Obamacare. However, investors have moved on and are focusing on Trump’s next move, which apparently will be legislation to reform the tax code. Germany will release key consumer inflation and spending data on Thursday and Friday, and unexpected readings could affect the direction of the euro. The economy, the largest in Europe, has has enjoyed a robust first quarter in 2017. Stronger global trade has led to increased demand for German exports, notably cars and machinery. Germany’s GDP expanded 1.6% in 2016, its highest rate since 2012. The generally positive picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.
It’s been a series of growing pains for the Trump administration, which has stumbled out of the starting gate. Trump, who has been in office for more than two months, has yet to provide any details of an economic policy. Last week, Trump’s proposed bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.
