The euro is paring earlier losses versus the US dollar in early trade on Wednesday following stronger than forecast German retail sales. An emergency rate cut by the Fed, dragged on the greenback in the previous session, although data sets to dominate today. At 08:30 UTC, EUR/USD is trading off two month highs and -0.1% lower at US$1.1157.
Euro Rebounds Ahead Of Data Heavy Session
The euro started Wednesday’s session on the back foot, although is attempting to reverse some of its earlier losses following better than forecast retail sales data from Germany. German retail sales rebounded in January after tumbling in the previous month. Retail sales jumped 0.9% month on month after declining 2% in December according to data from the Federal Statistics Office. The figures suggest that household consumption helped support growth in Europe’s largest economy at the start of the year.
Investors will now look ahead to the release of eurozone service sector PMI figures and retail sales data. Analysts are expecting eurozone retail sales to rebound in January, with forecasts of 0.6% month on month increase, compared to -1.6% decline in December. Further evidence of solid consumer spending could help push the euro into positive territory.
Dollar Recovers From Fed Rate Cut
The dollar dived in the previous session after the Federal Reserve made a surprise emergency 50 basis point cut to shore up the US economy in the face of coronavirus risk to the economy. The move came following a G7 finance ministers meeting earlier in the session, where the group pledged to take whatever steps necessary.
As the dust settled on the rate cut, the dollar advanced across the Asian session. Investors were also digesting news that centrist Biden staged a comeback for the Democrats presidential nominee race on Super Tuesday in the US. Whilst Joe Biden won big in the south, Sanders looks set to take the crown in the north.
Investors will now look ahead to the release of ADP private payroll figures and ISM non-manufacturing PMI data. Expectations are for the PMI to dip slightly to 54.9 in February after propelling ahead to 55.5 in January These figures will be closely watched as they are considered strong lead indicators for Friday’s non-farm payroll report.
