EUR/USD has started the week with gains. Currently, the pair is trading at 1.1434, up 0.35%. On the release front, German and eurozone retail sales beat their estimates. German Factory Orders disappointed, posting its first decline in four months. In the U.S., the sole event is ISM Non-Manufacturing PMI is expected to dip to 59.6 points. On Tuesday, Germany releases Industrial Production and JOLTS Job Openings.
The euro showed strong swings in the first week of 2019. The currency plunged over 1% on Wednesday stunning announcement from Apple, which cut its sales forecast for this quarter, blaming a drop in sales of iPhones in China. This was more negative fodder for investors, who are increasingly worried about the economic toll of the ongoing U.S-China trade war, which is has already caused a slowdown in China. The Apple announcement panicked investors, sending the safe-haven yen sharply higher, and the fallout pushed the euro and other currencies sharply lower.
Risk appetite rebounded late in the week, after Fed Chair Jerome Powell engaged in damage control, seeking to reassure the financial markets with regard to rate policy. The markets gave Powell a thumbs-down after the Fed’s December rate statement was on the hawkish side, and the equity markets reacted with sharp losses. Powell was much more cautious in remarks on Thursday, saying he was aware of the risks of a slowdown in the U.S. economy and that the Fed would be patient in its policy decisions. The Fed is currently forecasting two rate hikes next year, but some analysts have forecast a rate cut next year, with the U.S. economy expected to slow down, compared to its torrid pace in 2018.
