Euro Holds Steady Against US Dollar
The euro (EUR) remained stable against the US dollar (USD) on Wednesday, with the EUR/USD pair seeing a slight increase after an initial decline prompted by new US economic data. Currently, it’s trading around 1.1580, bouncing back from a daily low of 1.1547.
Looking at the recent US statistics from September, durable goods orders rose by 0.5%, following a solid 3% increase in August. This figure exceeded the forecast of a 0.3% uptick. When excluding transportation, orders increased by 0.6%, which again surpassed expectations—where analysts had predicted a 0.2% rise—and even outperformed the previous 0.5% record.
However, defense-related orders saw a modest increase of 0.1%, which fell short of the 1.9% expectation and matched the August numbers. On the job front, initial claims for unemployment benefits were reported at 216,000, which, interestingly, is higher than analysts’ prediction of 225,000. The earlier figure was revised upward from 220,000 to 222,000.
Amidst all this, the announcement regarding Phase 2 didn’t much affect the anticipation for a Federal Reserve rate cut in December. Current market sentiment suggests there’s roughly an 80% chance of a 25 basis point reduction during the meeting on December 9-10, as indicated by CME FedWatch Tools.
Meanwhile, the European Central Bank (ECB) is likely to maintain its interest rates at the next meeting. There’s an ongoing divergence in policies, with the Fed appearing more dovish, and the euro might have some potential for further gains.
Trading activity was somewhat subdued in the eurozone on Wednesday, with participants analyzing remarks from ECB officials. Yet, the EUR/USD fluctuations were mostly driven by movements in the US dollar. One of the governing council members, Madis Mueller, suggested that the ECB should wait before making any interest rate cuts, even if inflation dips a bit, highlighting signs of economic recovery.
Similarly, ECB Vice President Luis Deguindos offered a somewhat optimistic view on growth, asserting that risks appear balanced now. He pointed out that progress in services and wage inflation was encouraging, indicating that current interest rates still seem fitting.
