EURUSD rises as investors focus on a flood of economic data from the United States and the Eurozone.
During European trading hours on Monday, the EURUSD rose marginally above 1.0800. The major currency pair broadly continues sideways ahead of a data-packed week in which traders will receive economic growth and inflation statistics from both the United States (US) and the Eurozone, two crucial variables that normally influence the path of Interest rates are a key driver for currencies.
Investors in the Eurozone are likely to pay close attention to economic growth data because inflation predicted to continue close to the European Central Bank’s (ECB) 2% objective. Economists predict the Eurozone economy to increase by 0.8% year on year, exceeding the 0.6% expansion witnessed in the second quarter. When compared to 2Q 2024, economists predict the Eurozone will grow by 0.2% in Q3, the same rate as the previous quarter.
German economy predicted to decrease by 0.3% year on year, while the Eurozone as a whole expected to increase by 0.8% YoY.
Spain and other economies projected to make significant contributions to the Eurozone economy, while Germany’s largest economy expected to contract by 0.3% in Q3 compared to the same quarter a year ago.
At On the sidelines of the International Monetary Fund (IMF) meeting last week, ECB policymaker and Deutsche Bundesbank President Joachim Nagel stressed the importance of implementing the German government’s announced growth package to keep the economy from worsening.
“This would significantly contribute to strengthening the forces of growth. However, anything that could go beyond that in 2025 would be welcomed by the central bank,” Nagel added, according to Reuters.
Regarding the interest rate outlook, Nagel stated, “We shouldn’t be too hasty,” adding that the decision in December will be based on a number of indicators, including the outcome of the US presidential election and inflation data. His comments followed a few ECB officials had endorsed a larger-than-usual interest rate drop of 50 basis points (bps) in December.
Daily Market movers: EURUSD advances while US Dollar falls back.
EURUSD rises in Monday’s European session, as the US Dollar falls after reaching a nearly three-month high. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, falls from 104.60. However, the outlook for the US Dollar remains robust, as investors are anticipated to remain risk-averse with the US presidential election just a week away.
In different discussion panels held on the margins of the IMF meeting last week, central bankers explored the potential consequences of former US President Donald Trump defeating current Vice President Kamala Harris. Traders appear to be interpreting this circumstance as Positive for the US dollar, since Trump promised to raise tariffs by 10% on all economies except China, which would face far higher duties of 60%.
Risk aversion may persist in the face of uncertainties surrounding the US presidential election.
Aside from the uncertainties surrounding the US election. The US Dollar will be drive by a series of US data release this week. Market players will primarily focus on the JOLTS Job Openings and Nonfarm Payrolls (NFP) data to gauge job demand, as well as the Q3 GDP statistics to assess the present state of the economy.
