- Euro (EUR) slips after German consumer confidence -15.9
- Data comes following weak German IFO business sentiment data
- US Dollar (USD) looks to FOMC & US durable goods data
- Fed not expected to adjust policy
The Euro US Dollar (EUR/USD) exchange rate is slipping lower in early trade, paring gains from the previous session. The pair settled +0.3% higher on Tuesday at US$1.2160, after picking up from US$1.2107. At 09:15 UTC, EUR/USD trades -0.2% at US$1.2120.
The Euro is under pressure following dismal German consumer confidence data. GFK consumer confidence is set to plunge to -15.9 in February following down from -7.5 in January. Extended covid shutdowns and rising concerns over the heath of the jobs market are weighing on German consumers.
This was the fourth straight month of declines as the Eurozone’s largest economy struggles amid efforts to get the spread of the virus under control.
The data comes following weaker than forecast German IFO business sentiment data earlier this week. With cases in Germany still elevated, lockdown restrictions now extended and the vaccine rollout frustratingly slow the near term outlook remains depressed.
Attention will now turn to the US Federal Reserve monetary policy announcement which is due later today. This is the first Fed meeting under the Biden administration. The US central bank is not expected to adjust monetary policy, instead preferring to wait and see what fiscal stimulus can be pushed through under Biden in the coming weeks.
With no change in policy expected, close attention will be paid to the Fed’s language. The Fed could comment on recent economic weakness as recent data has disappointed. Investors will be particularly interested to hear what, if anything, the Fed has to say about tapering the bond buying programme and gradually reversing stimulus.
Ahead of the FOMC, US durable goods data will be eyed. Orders are set to show a slowdown in December. These figures feed directlky into the Q4 GDP which is due to be released on Thursday.