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Euro sturdy, US dollar falters after bullish run

business-articlesEuro sturdy, US dollar falters after bullish run
Euro sturdy, US dollar falters after bullish run
  • Widening Eurozone trade surplus supports euro
  • Canadian dollar pressured ahead of inflation data
  • Mixed US data leaves US dollar on back foot
Euro recovers ground as Eurozone shakes off trade worries
 
The unexpectedly sharp widening of the Eurozone trade surplus has set the euro on a generally stronger footing heading towards the weekend.
 
However, this morning’s finalised Eurozone consumer price index data for July could dampen the mood of EUR exchange rates.
 
While the headline annual inflation rate is expected to confirm an increase to 2.1% this could be overshadowed by a negative monthly figure.
 
As the consumer price index is forecast to show a contraction of -0.3% on the month the euro may well fall out of favour once again.
 
CAD exchange rates brace for inflation data
 
Worries over the progress of NAFTA renegotiations dented the Canadian dollar even as market risk appetite generally improved.
 
Investors may find fresh incentive to buy into the Canadian dollar this afternoon however if July’s consumer price index report proves positive.
 
Another solid month of inflationary pressure may encourage the Bank of Canada (BOC) to maintain a more hawkish outlook on monetary policy.
 
Any signs of weakening price pressure, on the other hand, could drive CAD exchange rates to further losses today.
 
Small improvement in US sentiment to support US dollar
 
The mixed nature of recent US data has left the US dollar on a weaker footing, with confidence in the outlook of the domestic economy diminishing.
 
As a result, investors are hoping to see an improvement in August’s University of Michigan sentiment index.
 
However, forecasts point towards a minimal uptick from 97.9 to 98, which is unlikely to boost USD exchange rates.
 
Unless US consumers demonstrate greater signs of optimism the US dollar could reverse more of its weekly gains heading into the weekend.
 
Upcoming Data
 
Friday, 17th August 2018
10:00 EUR Eurozone Consumer Price Index
13:30 CAD Consumer Price Index
15:00 USD University of Michigan Sentiment Index
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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