Weak eurozone data followed by upbeat US — China trade headlines helped lift the euro US dollar exchange rate from the session and weekly low of US$1.1054 to a high of US$1.1092. Whilst the pair has fallen from its high, it remains comfortably in positive territory.
The euro dropped in early trade following the release of German industrial production data. According to the German federal statistics agency domestic factory output declined -0.6% month on month in September. This was notably worse than the 0.3% recorded the month previous and worse than the -0.3% than analysts had expected. The weak data undermined the impressive German factory orders released yesterday. The figures suggest that it is almost inevitable that Germany will have slipped into recession. Investors will wait until next week for German GDP data for confirmation as to whether Germany is in a technical recession.
The common currency quickly picked on up headlines that the US and China are willing to gradually rollback tariffs should a trade deal be reached. This marks a turnaround in mood from yesterday when reports suggested that any signing of a deal would be pushed back until December. A trade deal and the removal of tariffs could provide some relief for German exporters which have been caught up in slowing global demand amid the ongoing US — Sino trade dispute.
There is no further eurozone economic data due to be released today. Investors will look ahead to German trade figures due to be released tomorrow to see whether exports slumped again in September.
Dollar Slips As Risk Sentiment Improves
The dollar has enjoyed a three-day winning streak amid encouraging trade deal headlines and stronger than forecast service sector data earlier in the week.
Today the dollar was taking a breather as risk sentiment improved. When investors have a greater risk appetite, they often sell out of the safe haven dollar.
There is no more data for US dollar investors to digest today. Trade headlines will continue to be a central focus with investors ideally looking for some confirmation from President Trump, in a tweet, that the US and China are willing to gradually undo the tariffs in the case of a trade deal.
What do these figures mean? |
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 EUR = 1.12829 USD Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro. Or, if you were looking at it the other way around: 1 USD = 0.88789 EUR In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar. |