Euro to US Dollar (EUR/USD) exchange rate steady as Eurozone faces increasing uncertainty
The Euro (EUR) struggled to gain against the ‘Greenback’ today despite a relatively strong German IFO Business Climate survey for September, which rose from 92.6 to 93.4.
However, with the Eurozone’s largest economy facing high levels of uncertainty as Europe’s Covid-19 infection rate creeps higher, today’s report failed to buoy the single currency.
Carsten Brzeski, the Chief Economist for the Eurozone and Global Head of Macroeconomics, commented on the report:
‘Looking ahead, after the strong rebound in the third quarter, the German economy has already entered the next stage of the recovery.’
‘This is the stage at which the mechanical rebound due to lifted lockdown measures comes to a halt and at which the more structural face of the Covid-19 crisis surfaces. This is the stage at which companies start to realise that social distancing and local lockdowns are here to stay for a while.’
Today also saw the release of the French Business Climate for Manufacturing survey for September.
Although the figure rose to 96, concerns linger over whether the Eurozone will quickly re-enter a recession as Covid-19 rates continue to climb.
US Dollar (USD) Rises as Risk-Sentiment Sours on Rising Covid-19 Cases
The US Dollar (USD) benefited from its safe-haven status today as uncertainty over the global economy continues to grow, boosting demand for safer assets as Covid-19 cases mount in Europe and America.
Analysts at Reuters commented:
‘The U.S. dollar traded at a two-month high and was set for a fifth day of gains on Thursday as investors sought safety on concerns over economic recovery as coronavirus cases surged in Europe and on U.S. data showed rising unemployment claims.’
In US economic news, today saw the release of the latest New Home Sales figure, which rose unexpectedly to 1.011 million in August. As a result, USD investors have become more optimistic about America’s economy.
Today also saw the release of the latest US Initial Jobless Claims, which fell to 878.25 thousand on a four-week average.
EUR/USD Forecast: Could Rising European Covid-19 Infections Drag Down the Single Currency?
US Dollar (USD) investors will be awaiting tomorrow’s release of August’s US Durable Goods orders.
If these confirm consensus and fall to 1.5%, then we could see the ‘Greenback’ further benefit as uncertainty grows for the global economy.
Furthermore, any indications of worsening US-China trade relations could also further increase demand for the safe-haven ‘Greenback’.
Euro (EUR) traders will be keeping a close eye on Europe’s coronavirus developments. If these continue to increase, then the EUR/USD exchange rate could fall.
Source: Euro Exchange Rate News