The euro is snapping a two-day losing streak versus the US dollar in early trade on Thursday. The euro US dollar exchange rate closed Wednesday’s session 0.3% lower at US$1.1113 close to the session low and support of US$1.1102.
Demand for the euro was soft in the previous session following disappointing data from Germany. German factory orders unexpectedly worsened, declining -1.3% month on month in November, down from 0.2% monthly growth in October. The data comes after strong consumer data from Germany earlier in the week. Investors had been hoping that he slump in the German manufacturing sector was start in bottom out. However, the reality from the data is quite different and suggests that the sector remains in free fall.
Today investors will keep Germany in focus with the release of German Industrial production figures. Analysts are expecting to see a slight improvement of -3.6% decline year on year up from a -5.3% decline the month earlier.
Data continue to show that exported nation Germany is being negatively impacted by the US – China trade dispute. Euro investors will hope that once the US – China phase one trade deal is signed next week, that global demand will pick up.
Dollar Eases As Risk Sentiment Improves
The safe haven greenback had rallied in early trade on Wednesday post Iran’s missile attacks. However, President Trump’s speech confirmed that here were no casualties and that “Iran appeared to be stepping down” which was good for all those involved. The ebbing of tensions saw investors moving out of safe havens such as the dollar and into riskier assets. As a result, the dollar pulled back from session highs.
US fundamentals were also underpinning the dollar. ADP private payrolls data showed that 202,000 new private sector jobs were created in December. This is ahead of the 160,000 forecast. Give the strong correlation between the ADP report and the non-farm payroll (NFP), the data bodes well for Friday’s jobs report (NFP).
Today investors will continue monitoring the situation in the Middle East. Any sign of a flare up could boost the safe haven dollar. Otherwise, investors will begin to turn towards the US non-farm payroll on Friday.
| 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. |
