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EUR USD Exchange Rate Surges on the Back of Impressive Eurozone Data

November 15, 2017 - Written by John Cameron

The Euro US Dollar (EUR USD) exchange rate continues to trend higher this morning as on the back of some very upbeat economic data from the Eurozone.

Euro (EUR) Strengthened by Strong Economic Data



The Euro jumped by over a cent against the US Dollar on Tuesday in the wake of so very impressive economic data from the Eurozone, the highlight of which was undoubtedly Germany’s latest GDP figures.

According to data published by German statistics agency, Destatis, Germany’s economy grew by 0.8% in the third quarter, easily sailing past expectations that economic growth would remain at a steady 0.6%.

Carsten Brzeski, Chief Economist at ING Germany said yesterday;

‘Never tired of good news? Then have a look at the latest German GDP data. The economy continues its golden cycle and staged yet another strong growth performance in the third quarter. Even if the economy would stagnate in the final quarter of the year, GDP growth for the entire year would still come in at 2.4%; the highest reading since 2011.’

Italy also released its own third quarter GDP figures yesterday and while not quite as impressive as Germany’s still beat market expectations, with growth jumping from 0.3% to 0.5%, against forecasts that its economy would see more modest growth of 0.4%.

These gains were extended ever further this morning as the release of upbeat Eurozone data appeared to continue with the publishing of France’s latest Consumer Price Index (CPI) this morning October’s final inflation reading confirmed that domestic inflation rose from 1% to 1.1% last month, its highest level since April.

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However slightly weighing on the Euro’s gains over the past couple of days is the knowledge that the upbeat data is unlikely to effect the European Central Bank’s (ECB) plans to keep interest rates on hold for the foreseeable future.

US Dollar (USD) Softens Ahead of Inflation Data



Meanwhile the US Dollar remains on the back foot this morning as investors await the latest US CPI report, to be released later this afternoon.

Economists forecast that figures will show that prices fell back again last month, with inflation slipping from 2.2% to 2% in October.

This poses a bit of an issue for the Federal Reserve persistently weak inflation is one of the bank’s key concerns, with some analysts even going so far as to suggest that it could prompt the bank to rethink a rate hike next month, something that would come as a notable shock to investor, most of whom have already priced in a 0.25% rise.

ING currencies strategist Viraj Patel said;
‘In what will be a pivotal test for the prospects of a December Fed rate hike, today’s CPI data also comes at a time when there is mounting evidence pointing to a more structural low inflation problem in the US economy.’

‘Looking through the short-term erratic factors, it is pretty difficult to find a composite measure of US prices that has on average seen 2 per cent annual inflation since the 2007-2008 crisis.’

While it seem unlikely at this time that anything could derail a rate hike next month, a dip in today’s inflation figures would likely prompt some concerns over the prospect of further monetary tightening next year.

EUR USD Exchange Rate Forecast: Jump in French Unemployment to Curb Euro’s Gains?



Looking ahead the EUR USD exchange rate may struggle to find further gains on Thursday as a predicted uptick in France’s unemployment rate in the third quarter is likely to take a little spring out of the Euro’s step tomorrow.

Meanwhile the US will also release its latest retail sales figures this afternoon which could exacerbate any losses prompted by the US inflation figures as economists forecast that sales will have remained flat in October after an impressive 1.6% growth the previous month.

Current Interbank Exchange Rates



At the time of writing the EUR USD exchange rate was trending around 1.1838 and the USD EUR exchange rate was trending around 0.8450.

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