The euro gave up ground versus the US dollar on Thursday. The euro US dollar exchange rate closed 0.1% lower at US$1.1136. The pair has had a quiet week with the euro up just 0.1% against the US dollar across the week. The euro is advancing versus the US dollar in early trade on Friday.
The euro slipped lower as investors struggled to find reasons to buy into the common currency, despite upbeat European Central Bank minutes from the December meeting. The minutes showed that there was a cautious optimism among policy makers that there are mild indications of core inflation is rising. Whilst these comments underpinned the euro, the ECB minutes also showed that the central bank was more cautious on the state of the economy as a whole.
Today investors will look towards eurozone inflation data. Analysts are expecting consumer prices to have increased 0.3% month on month in December, up from a -0.3% decline in November. The annual rate is expected to be 1.3% a six-month high, up from the previous month’s 1%. This still remains well below the ECB’s 2% target.
The ECB meets to decide monetary policy next week, its second monetary policy meeting with Christine Lagarde at the helm.
US Retail Sales Advance Again In December
The dollar moved broadly higher versus its peers on Thursday as investors digested encouraging US retail sales data. US retails sales climbed in December for a third straight month. Retail sales increased 0.3% month on month, whilst November sales were also revised upwards from 0.2% to 0.3%, according to the US Commerce Department.
The data supports the view that the US economy maintained moderate growth at the end of the year. The encouraging retail sales data comes amid solid job creation, wage growth at 2.9% and consumer confidence at the highest level since May. As a result, households were happy to spend across December.
Today the focus will remain on the US macro-economic calendar. Investors will look towards US industrial production; housing starts and consumer confidence data for further clues over the health of the US economy.
|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.