The euro trended lower versus the US dollar across the previous week. The euro US dollar exchange rate declined 0.8%, snapping three straight weeks of gains. The pair closed on Friday at US$1.1080. The euro is edging higher versus the US dollar as the new week kicks off.
The euro was broadly out of favour versus its peers last week, as investors digested parting comments from European Central Bank President Mario Draghi. Draghi chaired his final ECB monetary policy meeting. As analysts had expected the ECB kept policy unchanged, after having eased policy just last month.
Draghi bowed out with gloomy words, waring that slowing global growth and Brexit uncertainty pose a risk to growth in the eurozone economy. Concerns over Germany, Europe’s largest economy, being on the brink of recession are also increasing. Investors fear that the ECB will have to act again to boost stagnant low inflation and lacklustre growth. The prospect of further cuts hit demand for the common currency.
This week there are several key macro-economic releases that investors will pay attention to. These include eurozone inflation figures and GDP data from France and Italy. Brexit developments will also be closely monitored. Eurozone countries would benefit from a Brexit deal therefore any Brexit progress could boost the euro.
Dollar Investors Look Ahead To Busy Week
The dollar was finally on the rise last week, after three weeks of declines. Data showing that the US manufacturing sector could be stabilising helped lift the greenback in the previous week. The manufacturing pmi unexpectedly jumped for a second straight month in September, after months of decline, amid the ongoing US — Sino trade dispute. The better than forecast data helped quell concerns that the US economy could be heading towards recession.
This week volatility in the US dollar could pick up. There are several key events which could impact the dollar. These include US Federal Reserve monetary policy decision, the US non-farm payroll report and US GDP data.
Investors are currently assuming a 94% probability of the Fed cutting interest rates this month. What investors really want to know is whether the Fed will continue cutting or whether this will be the final cut in the current easing cycle.
|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.