EUR/USD continues to have an uneventful week. Currently, the pair is trading at 1.2319, down 0.01% on the day. On the release front, there are no major eurozone events. In the US, the focus is on inflation indicators. PPI is expected to edge lower to 0.1%, and Core PPI is forecast to remain unchanged at 0.2%. On Wednesday, ECB President Mario Draghi speaks at an event in Frankfurt. The US releases consumer inflation reports, and the Federal Reserve will publish the minutes of its March rate meeting.
Investors are breathing a sigh of relief after Chinese President Xi Jimping sent out a conciliatory message earlier on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Although China has previously declared that it would reduce the tariffs on vehicles, the markets were looking for some positive news, as the trade battle between the two largest economies in the world has shaken the markets in recent weeks. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.
US employment numbers ended the week on a mixed note, and the euro gained ground on Friday. US nonfarm payrolls, one of the most important economic indicators, plunged to just 103 thousand, well off the forecast of 188 thousand. Still, the markets do not appear overly concerned, as payroll reports often sag in March. On a more positive note, wage growth improved to 0.3%, matching the forecast. This improvement is likely to reinforce sentiment that the Federal Reserve could press the rate trigger four times in 2018. The Fed has maintained its forecast of three rate increases this year, and an upwards revision could boost the US dollar against the euro and other rivals.
