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Euro US Dollar (EUR/USD) Exchange Rate Stable as German Exports Rebound

November 8, 2019 - Written by John Cameron

Euro (EUR) Stabilises on Solid German Trade Figures

The Euro (EUR) exchange rate is holding its ground this morning as markets cheered some surprisingly upbeat trade figures from Germany.

According to data published by the Federal Statistics Office, Destatis, Germany’s trade surplus ballooned to €21.1bn from €16.4bn in September.

This came on the back of an impressive rebound in exports, which expanded by 1.5% after previously contracting 0.9% in August.

This was the largest expansion in exports in nearly two years and was welcomed by some analysts who suggest it may help Germany narrowly avoid a recession.

Carsten Brzeski, Chief Economist at ING Germany suggested:

‘Today’s trade data leave analysts somewhat scratching their heads. Despite the ongoing trade woes, German exports had a better-than-expected quarter.

‘With today’s data, a technical recession is not yet a done deal. In fact, today’s trade data suggests there has been hardly any negative drag from net trade on 3Q GDP.

‘While there is no doubt that industry is in recession, the entire German economy could have avoided another contraction - and hence a technical recession - at the very last minute.’

Germany’s export focus industry has suffered in recent months at the US-China trade dispute and slowing global growth have both taken their toll.

Recent industrial data from the country has been mixed, with German factory orders surging past expectations in September at the same time that industrial production has contracted.

US Dollar (USD) Flat amidst Mixed US-China Trade Headlines

After storming higher throughout the week, the US Dollar (USD) appears to be taking a pause this morning amidst some conflicting headlines regarding US-China trade relations.

Earlier this week, it was suggested that the US and China may begin rolling back tariffs as part of the preliminary trade deal currently being negotiated.

However overnight on Thursday reports emerged suggesting that not everyone in the White House is convinced that rolling back tariffs is the right move.

Also keeping a cap on the US Dollar this morning is a sense of caution ahead of the release of the US consumer sentiment figures later this afternoon.

The US Michigan consumer sentiment index will be watched closely by USD investors for any hints on household spending intensions, with USD exchange rates potentially dipping if concerns over the US-China trade dispute continue to weigh on sentiment.

EUR/USD Exchange Rate Forecast: Euro to Tumble as German Recession to be Confirmed?

Looking ahead to next week’s session, the Euro US Dollar (EUR/USD) exchange rate looks set to tumble next week, as Germany publishes its long awaited GDP figures.

In spite of today’s upbeat trade figures, the preliminary reading for the third quarter is still widely expected to reveal that economic growth contracted by 0.1%.

This will confirm fears that the Eurozone’s largest economy slipped into a recession this year and could send the Euro reeling on Thursday.

Meanwhile the focus for USD investors next week is likely to be on the latest US consumer price index.

This is expected to reveal that underlying inflation ticked up again in October, rising from 2.4% to 2.5%.

The robust inflation report is likely to be well received by markets, with the US Dollar likely rising on the expectation this will allow the Federal Reserve to keep interest rates on hold for the time being.

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