EUR/USD is showing little movement in the Thursday session. Currently, the pair is trading at 1.1695, down 0.11% on the day. On the release front, German Preliminary CPI is expected to dip to 0.1%. The US will release key consumer spending and inflation reports, as well as unemployment claims. On Friday, Germany releases retail sales and the eurozone publishes CPI Estimate. In the U.S, the key event is UoM Consumer Sentiment, which is expected to drop to 95.5 points.
The U.S economy continues to fire on all cylinders. GDP for Q2 was revised upwards to 4.2%, edging above the estimate of 4.0%. This reading was above the initial GDP release of 4.1% back in July. Growth in the second quarter was much stronger than in Q1, which posted a gain of 2.2%. Will the strong data continue in the third quarter? Consumer spending has been strong early in the quarter, but housing data has disappointed, with recent key indicators missing expectations. Although the GDP release beat the estimate, the US dollar failed to gain ground as the euro held its own on Wednesday.
The euro was last above the 1.20 line in May, and this symbolic level could remain elusive for quite some time. The reason? Mario Draghi and his ECB colleagues continue to send out the message that the ECB has no plans to raise rates until after the summer of 2019. The markets are not expecting a rate hike before October 2019, which means that the euro won’t be able to attract investors based on higher interest rates. This means that the euro is not particularly attractive unless there is an unexpected improvement in the German and eurozone economies.
