The Euro versus US Dollar exchange rate remains unmoved in early trade as investors look ahead to Federal Reserve Chair Jerome Powell’s speech later today.
The pair settled in the previous session +0.37% at US$1.0848. At 08:15 UTC, EUR/USD is trading flat at US$1.0848.
EUR: Eurozone Industrial Production Up Next
The Euro continues to trade within a familiar range as economies within the Eurozone cautiously reopen. Germany recorded a decline in new infections as the transmission rate fell below 1, after three days above the threshold. Fears had been growing that higher infection numbers would hamper Germany’s efforts to reopen its economy.
Today investors will look ahead to the release of industrial production data, due later this morning. Analysts are expecting industrial production to contract -12.1% month on month in March, down from -0.1% decline in February. On an annual basis industrial production is expected to drop -12.4%, reflecting the shutting down of the economy in lockdown.
USD: Powell To Dash Negative Rate Hopes
The US Dollar is holding steady as investors look ahead to a live streamed speech by Fed Chair Jerome Powell on economic issues. His speech comes following data yesterday that showed that consumer price inflation dived -0.8% in April, fuelling speculation of negative interest rates.
Federal Reserve policy makers have so far pushed back on speculation of a negative interest rates owing to the impact that the policy move would have on the financial sector. However, Fed Fund rates are indicating that the Fed will take rates negative in June 2021.
The broad expectation is for Jerome Powell to follow in his colleagues footsteps dashing hopes for negative rates.
The Dollar closed lower in the previous session after top health advisor to President Trump, Anthony Fauci warned that the if the US eased lockdown measures too early, the road to economic recovery would be much longer and the death toll much higher.
On the economic calendar, inflation at wholesale level, as measured by the producer price index (PPI), could attract some attention. Analysts are expecting PPI to remain flat in April after increasing +0.2% in March.
