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Euro US Dollar Exchange Rate Slips on Solid US Datasets

Published: 6 Oct at 3 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Forex, Euro Crisis, Exchange Rates, Economy,

The Euro US Dollar exchange rate continued to slip on Thursday after giving up recovery attempts on Wednesday, as the week’s US data continues to bolster US Dollar demand while Eurozone news fails to inspire. EUR/USD has trended below the week’s opening levels of 1.1239 for the whole week so far, and traded near 1.1185 on Thursday morning.

Euro (EUR) Struggles to Hold Ground on Mixed Data

The Euro has seen little in the way of inspired movement this week. While sentiment towards the shared currency isn’t low, it has dropped against many major rivals due to mixed Eurozone datasets.

Wednesday’s session saw the publication of the Eurozone’s Services and Composite PMIs for September. After heavily disappointing preliminary figures for the services sector, German Services scored a slightly better 50.9 in its final September print.

This brought Eurozone Services up to 52.2, but despite beating preliminary prints just slightly, the Eurozone’s Composite PMI still came in with a 20-month-low of 52.6.

Thursday’s Eurozone data was equally mixed. German factory orders for August impressed, improving from 0.3% to 1.0% month-on-month and from -0.6% to 2.1% year-on-year. Germany’s September Construction PMI also improved, from 51.6 to 52.4.

Despite this, September’s Eurozone Retail PMIs disappointed. Germany’s retail print slowed from 54.1 to 53, while the overall Eurozone figure printed a contraction of 49.6.

US Dollar (USD) Bolstered by Optimistic US Ecostats

After seeing mixed demand throughout September, the US Dollar has experienced a solid improvement in demand and sentiment over the last week, due to improving market conditions and better-than-expected data.

Wednesday’s American session was especially impressive when it came to the latest US stats. While ADP’s September employment change report was disappointing, the day’s other economic figures left traders cheerful.

Markit’s final US Services and Composite prints both beat preliminary results, each scoring 52.3 for September. ISM’s Non-Manufacturing Composite PMI was even more impressive, surging from 51.4 to 57.1.

The day’s August data also beat expectations, with factory orders slowing from 1.4% to 0.2% rather than contracting at -0.2%, and August’s final durable goods orders figures improving from a preliminary 0.0% to 0.1%.

Euro US Dollar Exchange Rate Forecast: Key Non-Farm Payroll Report Due Friday

The US Dollar is certain to drive EUR USD movement as the week draws to an end, with markets highly anticipating Friday’s slew of key US data. As a result, investors are likely to continue piling into the US Dollar on Thursday afternoon and adjust their positions ahead of Friday’s American session.

Eurozone markets could drive the pair briefly in the morning following the publication of Germany’s August industrial production figures, but ‘Greenback’ traders are unlikely to budge until the afternoon’s September US Non-Farm Payroll report is published.

Non-Farm Payroll figures are one of the Federal Reserve’s key indications for the health of the US economy. After highly impressive US labour figures in both June and July, August’s NFP report was highly disappointing to forex markets.

If Friday’s NFP results impress markets, the US Dollar could solidify its gains against the Euro this week. Impressive NFP results would also cause bets of a Federal Reserve interest rate hike in December to improve.

An increase in demand for ‘safe-haven’ currencies like the US Dollar could also affect the strength of the Euro US Dollar exchange rate in the coming month, as jitters over the US Presidential election in early-November will see investors seeking out safer assets.

At the time of writing, the Euro US Dollar exchange rate trended in the region of 1.1188, while the US Dollar Euro exchange rate trades at around 0.8935.