The Euro to US Dollar (EUR/USD) exchange rate is unlikely to undergo significant alterations over the course of the week during the Christmas holiday period.
The EUR/USD pairing fluctuated on Friday in response to better-than-expected economic reports from Germany.
Firstly, the GfK Consumer Confidence Survey climbed from 8.7 to 9.0 rather than rising to 8.8 as expected.
Secondly, the German Producer Price Index stagnated on the month in November rather than falling by -0.2% as predicted. On the year the gauge of producer prices improved from -1.0% to -0.9% rather than sliding to -1.1% as expected.
Meanwhile, the US Dollar derived support from an improvement in the Kansas Fed Manufacturing Index.
The Fed Manufacturing gauge advanced from 7 to 9 rather than stagnating as expected.
According to industry expert Chaud Moutray; ‘The indices for new orders (up from 1 to 12) and shipments (up from 7 to 15) reflect some strengthening in demand and output after a weaker-than-desired October and November in the district. The pace of production and hiring reflected decent growth, with measures for both unchanged for the month. Another positive was the continuing deceleration in raw material costs, with that index down from 20 in September to 5 in December. Reduced energy prices likely accounted for this shift in cost pressures.’
EUR/USD Exchange Rate May Soften on Monday
With a distinct lack of European data on Monday, the shared currency will be subject to changes in the foreign currency market. However, the solitary domestic data publication has the potential to influence changes for the Euro. Eurozone Consumer Confidence hit -11.6 previously. Given that Eurozone Consumer Confidence has declined over the past few months, the Euro will soften considerably if the data prints negatively.
In terms of US data, the Chicago Fed National Activity Index and Existing Home Sales have the potential to spark volatility for the Euro to US Dollar exchange rate.
UPDATE
Despite the fact that European data printed poorly on Monday, the shared currency strengthened against nearly all of its major peers. This is possibly a reverse in sentiment towards the prospect of quantitative easing, with traders feeling it will be a necessary action to prevent economic crisis in the Eurozone. The US Dollar, meanwhile, is holding steady against its rivals as traders await data due for publication on Monday afternoon.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.2269.
EUR/USD Could Fluctuate on Tuesday
Although there is very little by way of European data on Tuesday, the French Gross Domestic Product will be of interest to those invested in the common currency. Given that there isn’t any US data until the afternoon, the Euro to US Dollar exchange rate is likely to fluctuate.
For those trading with the US Dollar, Durable Goods Orders will be of significance. Given that orders for goods have large sway over the actual production; this figure serves as an excellent forecast of U.S. output to come. Durables Ex Transportation, Annualised Gross Domestic Product, University of Michigan Confidence, New Home Sales, Personal Income, Personal Spending and Core Personal Consumption Expenditure will all have the potential to initiate changes for the US Dollar.
EUR/USD to Soften on Wednesday
A complete absence of European data on Wednesday will see the shared currency subject to changes in foreign currency movement. For those trading with the US Dollar, Mortgage Applications, Initial Jobless Claims and Continuing Claims have the greatest influence over movement.
EUR/USD to Experience Little Movement on Thursday and Friday
Although there are a couple of European data publications on Thursday, the fact that it is Christmas day is likely to have a significant impact on trading. Quiet trading and a lack of influential data are likely to see the Euro to US Dollar exchange rate trading within a tight range.
A complete absence of domestic data pertaining to Europe and the US, in addition to quiet trading, is likely to see the Euro to US Dollar exchange rate trending within a narrow range on Friday.
At the close of last week, the Euro to US Dollar exchange rate was trending in the region of 1.2275.
