As we enter into Thursday, the euro is still struggling to find a rallying point to drag itself out of its recent slump in the global currency market. Following the recent stumble which sent the euro lower than $1.08 for the first time in three years, the single currency looks to be stuck in a rut. The future performance of the euro looks outnumbered also, with global news flow, economic data and option market positioning all seemingly stacked against the single currency.
Euro Falls Against the USD as German Economic Figures Slump, With More Disappointment Forecast
The euro to USD exchange rate has been falling for a number of weeks now. A combination of the euro’s weakness and the dollar’s strength have kept the two at a distance from each other. The euro has failed to perform on many data releases with the latest being the German ZEW survey which was released on Tuesday, showing a decrease in investor confidence as the German economy struggles following the coronavirus outbreak impact.
Meanwhile, the coronavirus has helped USD, with investors flocking to the currency as the safe haven of choice considering the other safe haven currencies in the Japanese Yen and the Swiss Franc’s considerable links with the Chinese economy. Risk sentiment continues to remain low due to the virus fears. Following the outbreak, the market feared a lower demand for oil, which has occurred, seeing oil-linked currencies like CAD lose out. As a result of the virus China’s productivity has declined, and as the world’s leading importer of raw commodities and materials, the decrease has had a knock-on effect for other countries. Germany’s auto manufacturing has taken a hit, with China being one of the largest importers of German-made cars.
Euro Could Continue to Struggle as It Awaits More German Data Today
Later today will see more data released for Germany. Investors may wince at the announcement following the recent poor performances from Germany, but this could give the Eurozone’s largest economy a chance to make up for its recent damage.
The German producer price index and the Gfk consumer confidence survey are both due later today, with the market forecasting a slight increase in the producer price index for the month-on-month figure, but a downturn for the year-on-year number as well as the Gfk consumer confidence survey – which is arguably the most important of the three releases for the day. The consumer confidence survey will give an insight into the economy and the consumers, who drive the economy. Investors will look for any rallying point to help the euro find its feet in the market considering the recent few weeks of poor performances, which has landed the euro trading towards the bottom of the major currencies.
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