- Euro (EUR) gained on Tuesday after data showed Germany to be on the road to economic recovery
- Rising coronavirus cases, particularly in Spain are unnerving investors who fear a nationwide lockdown
- US Dollar (USD) investors look ahead to Federal Reserve Chair Jerome Powell’s testimony tomorrow
- US consumer confidence weakened sharply, US durable goods orders are expected to remain solid
After gaining across the previous session, the Euro US Dollar (EUR/USD) exchange rate is trading on the back foot. The pair settled on Tuesday +0.4% at US$1.833. At 07:15, EUR/USD trades -0.25% at US$1.1804. This is at the lower end of the daily traded range.
The final reading of German Q2 GDP showed that the German economy shrank by slightly less than forecast. German business confidence data also pointed to the Eurozone’s largest economy being on the road to recovery. The data helped buoy the Euro on Tuesday.
Today there is little on the economic calendar to keep euro investors entertained. As a result, the common currency is expected to focus on sentiment.
Coronavirus cases are creeping higher on mainland Europe; Spain is leading the charge. With 7000 new daily cases the Spanish government has so far resisted a nationwide lockdown. However, the evolving situation is unnerving Euro investors.
The US Dollar is back in favour on Wednesday as risk sentiment falters and as investors look ahead to Federal Reserve Chair Jerome Powell taking the (virtual) stage at the Jackson Hole Symposium tomorrow.
Prior to the central bankers gathering, US durable goods orders will be under the spotlight. Purchases of long-lasting consumer goods are expected to continue their recovery from March and April lows. Analysts forecast a 2% increase in July (ex transportation), down from 3.3% in the previous month.
US data has been a mixed bag lately. US consumer confidence plummeted to a new pandemic low in August, weighed down by concerns over coronavirus induced job losses. Consumer spending is expected to be lower over the coming months as a result of the decline in confidence.
Meanwhile the US housing market continues to impress with new homes sales jumping 13.9% to the highest level in over a decade, despite the number of American’s out of work running into the tens of millions.