The euro closed the previous session at US$1.1151 versus the US dollar, approximate the same level that it opened the session. The euro US dollar exchange rate is trending lower in early trade on Wednesday.
The euro was well supported in the previous session despite a shortage of economic data to drive the common currency. Instead the euro found support from broad risk sentiment which has remained buoyant following the announcement of the US – China trade dispute.
Today eurozone data will remain in focus with the release of German and eurozone IFO business sentiment data and eurozone inflation numbers. Analysts are expecting business sentiment figures to show an uptick in confidence, supporting the idea that the bloc’s economy could’ve slowly turning a corner.
The euro could also get a boost from inflation figures. Consumer prices are expected to have increased 1% year on year in November, up from 0.7%. However, on a month basis inflation is expected to have declined -0.3%, clouding the picture. Stronger inflation usually boosts a currency’s value as it often seen as a step towards tighter monetary policy. However, with inflation still significantly short of the European Central Bank’s 2% target, the central bank is set to remain accommodative for the foreseeable future.
Impeachment & Trade
The dollar traded broadly higher versus its peers on Tuesday, boosted by strong US economic data and caution over the US -China trade deal. Data showed that manufacturing production rebounded strongly in November, rising by more than what analysts had been expecting. Manufacturing production rose 1.1% last month after falling-0.7% the previous month.
Concerns over the US -China trade dispute are lingering. Details have been in short supply which has unnerved some investors. Whilst the US stock market has rallied to record highs following the trade agreement, trade related currencies have been less in demand.
President Trump is expected to be the third US President to be impeached today. The US Senate is unlikely to get the two thirds majority needed to oust the President. Therefore, for the US dollar, today’s impeachment is considered a non-event for the dollar.
|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.