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Euro to US Dollar Exchange Rate Today - EUR/USD Rises as US Trade Deficit Jumps to a 10-Year High

March 6, 2019 - Written by John Cameron

The Euro US Dollar (EUR/USD) exchange rate rose over the course of Wednesday's session (06.03.2019), with the pairing currently trading at an inter-bank rate of $1.1317.

This afternoon the US trade deficit hit a 10-year high, as the figure hit -$59.8B.

Data showed that exports of US goods rose by $148.9B, while imports rose by $217.7B.

This is the widest gap since 2008 when the US fell into a recession as a result of the global financial crisis.

Commenting on this, Andrew Hunter of Capital Economics wrote:

‘The widening in the trade deficit to a 10-year high of $59.8B in December, from $50.3B, confirms that net trade was a drag on GDP growth in fourth quarter, and we expect that drag to intensify in the first quarter […]

‘Import growth is on course to pick up, but the decline in December will hold back real exports, particularly with global demand continuing to weaken. With real consumption growth also set to slow following weakness in December, the upshot is that GDP growth remains on course to slow to only around 1.5% annualised in the first quarter.’

Yesterday: US Dollar (USD) Rises as Services Sector Accelerates to Seven-Month High

Yesterday afternoon the Euro US Dollar (EUR/USD) exchange rate fell following the release of the US services and composite PMIs.

Data showed that business activity within the services sector accelerated to a seven-month high in February.

Commenting on the composite PMI, Chief Business Economist at IHS Markit Chris Williamson said:

‘With the size of the cast service sector overshadowing the manufacturing sector, the two surveys suggest the overall pace of economic growth accelerated in February. Having correctly indicated that the economy grew at a slower but still solid pace in the fourth quarter (our model from the survey indicated 2.5% growth against an initial official estimate of 2.6%), the data for the first two months of 2019 point to a similar 2.6% annualised rate of expansion.

‘[…] The worry is that the manufacturing slowdown will spill over to the service sector, damping economic growth in coming months. Companies themselves certainly appear to have become more circumspect, with business optimism cooling in February amid worries over the impact of tariffs, trade wars, higher prices and rising interest rates.’

Following this data release the ISM non-manufacturing PMI rose to a higher-than-forecast 59.7 in February from the previous 56.7.

The index rose to a three-month high, which likely helped to buoy the ‘Greenback’.

Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Slip on Below Target GDP?

Tomorrow’s Eurozone’s GDP figure for Q4 2018 may cause movement in the Euro US Dollar (EUR/USD) exchange rate.

If the Eurozone’s annual GDP remains steady at 1.2% it may weigh on the Euro as this is still far below the European Central Bank’s (ECB) 2% target.

Also likely to cause movement of the single currency is the release of the ECB’s interest rate decision and the subsequent monetary policy statement.

The ECB is expected to keep rates unchanged at 0%, however, if the subsequent monetary policy statement is dovish, the Euro could slide.

The ‘Greenback’ could rise tomorrow afternoon following the release of non-farm productivity figures for Q4 2018.

If productivity rises by 1.7% as forecast, or higher, the Euro US Dollar (EUR/USD) exchange rate is likely to slip.

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