EUR/USD Exchange Rate Sinks as Eurozone Economy Struggles as Covid-19 Cases Mount
The Euro to US Dollar (EUR/USD) exchange rate dipped today, with the pairing currently fluctuating around $1.169.
The Euro (EUR) fell against the ‘Greenback’ today following the release of the Eurozone flash PMI Composite figure for September, which fell unexpectedly from 51.9 to 50.1.
As a result, EUR investors are becoming more concerned for the bloc’s economy as Covid-19 infection rates continue to climb throughout Europe.
Chris Williamson, Chief Business Economist at IHS Markit, commented on the survey:
‘The Eurozone’s economic recovery stalled in September, as rising COVID-19 infections led to a renewed downturn of service sector activity across the region.’
‘A two-speed economy is evident, with factories reporting that production growth was buoyed by rising demand, notably from export markets and the reopening of retail in many countries, but the larger service sector has sunk back into decline as face-to-face consumer businesses in particular have been hit by intensifying virus concerns’.
Today also saw the release of October’s German GfK Consumer Confidence Survey, which fell below forecasts to -1.6.
The EUR’s gains have been limited by an increasingly bleak outlook for the Eurozone’s powerhouse economy.
US Dollar (USD) Edges Higher as Safe-Haven Demand Buoys American Currency
The US Dollar (USD) rose on renewed safe-haven demand today as the number of Covid-19 cases continues to increase worldwide. Investors have sought out the ‘Greenback’ as riskier assets look less appealing.
Meanwhile, US-China trade tensions continue to worsen after US President Donald Trump criticised Beijing’s handling of the coronavirus. Mr Trump has repeatedly accused China of being to blame for the spread of Covid-19.
As a result, this has sparked a sell-off of risky assets and buoyed safe-haven currencies.
In US economic news, today will see the release of the flash Manufacturing PMI for September. Any improvement in America’s manufacturing and industrial sector could provide a further boost for the ‘Greenback’.
Today will see the US Federal Reserve Chairman, Jerome Powell, testify. Any dovishness about the American economy could further buoy demand for the safe-haven US Dollar.
EUR/USD Forecast: Could a Deteriorating Outlook for the Global Economy Continue to Buoy the ‘Greenback’?
Euro (EUR) investors will be awaiting tomorrow’s release of September’s German IFO Business Climate report. Any indication that the Eurozone’s largest economy is struggling would prove EUR-negative.
Tomorrow will also see the European Leaders Special Summit. If the outlook for the Eurozone’s economy and coronavirus situation worsens, then the EUR/USD exchange rate will suffer.
US Dollar (USD) investors will be paying close attention to tomorrow’s latest US jobs data. If unemployment continues to rise, we could see some of the ‘Greenback’s gains compromised.
The EUR/USD exchange rate will likely remain subdued this week. The US Dollar will likely continue to reap in safe-haven demand as the global economic outlook continues to deteriorate.