EUR/USD remains under pressure in the Friday session. Currently, the pair is trading slightly below the 1.07 level. On the release front, eurozone numbers were mixed. German data was sharp, as Retail Sales jumped 1.8%, well above the estimate of 0.7%. As well, unemployment claims dropped by 30 thousand, compared to the estimate of 10 thousand. However, eurozone inflation data was not as strong, as CPI Flash Estimate dropped to 1.5%, short of the forecast of 1.8%. In the US, today’s highlight is UoM Consumer Sentiment, which is expected to improve to 97.8 points.
It’s been an eventful week for the euro, which has shown strong movement in both directions. The currency jumped above the 1.09 level on Monday, its highest level since November 2016. However, it’s been all downhill since then, as the euro struggles to stay above the 1.07 line. The German economy, the largest in Europe, is looking sharp and has enjoyed a robust first quarter in 2017. Stronger global trade has led to increased demand for German exports, notably cars and machinery. Germany’s GDP expanded 1.6% in 2016, its highest rate since 2012. The generally positive picture in Germany has boosted the eurozone economy and if the strong numbers continue, the ECB will be under more pressure to tighten monetary policy.
It’s been a rocky start for the Trump administration, which has been beset by controversy and crises since Donald Trump assumed office in January. Trump has yet to provide any details of an economic policy, to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.
