Contents
EUR/USD rise in a notable upswing of 2.10% During the week concluding on November 17. Concluding the week at a value of $1.09088. The currency pair saw a decline to a weekly low of $1.06650 on Monday. Followed by a subsequent ascent to a peak of $1.09139 on Friday.
EUR/USD Rise: German Producer Prices, Private Sector PMIs, and Business Sentiment for EUR/USD
On Monday, the forthcoming release of German producer price figures for October poised to capture the attention of investors. A less pronounced decline in producer prices may serve as an indicator of an improving demand landscape. As producers strategically adjust pricing to enhance competitiveness and attract new clients. Conversely, lower prices may be indicative of a more competitive, yet low-demand economic scenario.
Nevertheless, the preliminary private sector Purchasing Managers’ Indices (PMIs) for France, Germany, and the Eurozone anticipated to exert a more substantial influence on trends in the EUR/USD . Elevated private sector PMIs would suggest a positive demand outlook for private sector firms in the Eurozone.
Of notable significance is the services sector, contributing over 60% to the Eurozone economy. Also wielding considerable influence over buyer sentiment for the EUR/USD. A more pronounced contraction in service sector activity could potentially alleviate the imperative for a hawkish European Central Bank (ECB) rate trajectory. Particularly considering the substantial role the services sector played in inflation during October.
However, it is imperative for investors to delve into the sub-components of the data for a more nuanced understanding. Parameters such as optimism, pricing, new orders, and employment will furnish a more comprehensive view of the prevailing macroeconomic conditions.
Also Read: Canada CPI: Softening in Inflation as Loonie Gears Up
Looking ahead to Friday, careful consideration is warranted for the release of third-quarter GDP and business sentiment figures for Germany. A larger-than-expected economic contraction and a notable decline in business sentiment have the potential to unsettle buyers of the EUR.
ECB Minutes, Financial Report
While the data merits careful consideration, the ECB Monetary Policy Meeting Minutes, Financial Stability Report, and forthcoming speeches by ECB President Lagarde and Chief Economist Philip Lane are also significant factors. A shift towards a more dovish stance regarding discussions on potential rate cuts could potentially test the market’s appetite for the EUR/USD.
EUR/USD Rise: FOMC Minutes, Economic Indicators, and Fed Speakers’ Influence
On Tuesday, all eyes will be on the forthcoming release of the FOMC meeting minutes. Following recent updates on inflation and retail sales, speculation in the markets is leaning towards a potential Fed rate cut in May. However, the market is eagerly awaiting the reactions of Fed speakers to the latest data. Should their commentary take on a more hawkish tone. As it has the potential to spur a recovery in the US dollar.
The impact of core durable goods orders, scheduled for release on Wednesday, is expected to be mitigated by the insights gained from the FOMC meeting minutes.
Closing out the week, preliminary private sector PMIs for November will be unveiled on Friday. Given that the US services sector contributes over 70% to the overall US economy, an unforeseen contraction in this sector may sow concerns about a significant economic downturn. Also heighten expectations for a Fed rate cut in May.
Given the market’s intense focus on the potential timing of a Fed rate cut, it becomes imperative to closely monitor speeches from FOMC members for additional insights.
