STORY LINK Unsurprisingly Dovish ECB Bulletin Fails to Shore up EUR USD Exchange Rate
‘Of the four largest euro members, only Italy recorded faster growth in July, pushing the PMI into territory consistent with 0.5% quarterly GDP growth. Spain nevertheless continued to record the strongest overall expansion, with the PMI indicative of 0.9% growth.
‘The slowdown in Germany meant it registered the weakest increase in activity of the four largest euro countries for the first time in over 12 years, though the ten-month low PMI reading still points to a 0.4- 0.5% GDP growth rate.’
‘The main challenge with the US labour market is not job creation. Although the pace of jobs growth has slowed, it remains sufficiently strong to absorb more slack in the labour market. In 2016, the US created an average of 187k net new jobs a month. In H1 17, it created 180k a month. The problem for many American households and the Federal Reserve is that wage growth remains meagre.’
‘From the Fed's point of view, headline inflation converges to core inflation, and core inflation converges to wage growth. The weak wage growth is an obstacle to the achievement of the Fed's inflation target.’
On the other hand, if wages are found to have strengthened in the last month this could extend the losses of the EUR USD exchange rate ahead of the weekend.
Weak German Data Could Extend Euro Losses
The mood towards the Euro could sour further on Friday, meanwhile, if the latest raft of German data fails to signal greater resilience within the domestic economy.
If the German factory orders, Construction PMI or Retail PMI figures add to evidence that the Eurozone’s powerhouse economy is starting to falter this could weigh heavily on EUR exchange rates.
Forecasts point towards a solid uptick in factory orders on the year, however, which could encourage investors to buy back into the single currency.
Any improvement in the various Eurozone retail PMIs may equally help to shore up the EUR USD exchange rate in the short term, even if any positive showings are unlikely to boost the prospect of a more hawkish ECB outlook.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.
TAGS: Euro Forecasts
Comments are currrently disabled