- EUR/USD moves little as traders adopt caution ahead of Eurozone GDP and US Retail Sales data due on Friday.
- Eurozone GDP may remain consistent at 0.9% growth YoY in Q4, as expected.
- US Retail Sales are forecasted to contract by 0.1% MoM in January, following a previous increase of 0.4%.
EUR/USD holds steady around 1.0460 during Asian trading hours on Friday, following three consecutive sessions of gains. The pair strengthened after US President Donald Trump delayed the implementation of reciprocal tariffs. Meanwhile, the US Dollar (USD) weakens amid declining US Treasury yields, despite ongoing concerns over a global trade war.
Investors now turn their focus to the upcoming US Retail Sales report, the final key economic release of the week. Markets expect a slight monthly contraction of 0.1% in January, following a 0.4% increase in the previous period.
The US Dollar Index (DXY), which tracks the USD against six major currencies, extends its losses for a fourth straight session, trading around 107.00. At the time of writing, US Treasury bond yields stand at 4.31% for the 2-year note and 4.53% for the 10-year note.
In the US, Core PPI inflation rose to 3.6% YoY in January, surpassing the expected 3.3% but slightly below the revised 3.7% (previously reported as 3.5%). This has reinforced expectations that the Federal Reserve (Fed) will postpone rate cuts until the second half of the year. Persistently high inflation may also support the Fed’s stance of maintaining interest rates at 4.25%-4.50% for an extended period.
The Euro could face potential headwinds as European Central Bank (ECB) policymaker Boris Vujčić indicated on Thursday that markets are pricing in three rate cuts this year, a forecast he described as reasonable, according to Reuters. Vujčić also suggested that the ECB could remove its reference to a "restrictive policy" in the March statement, citing expectations of a swift decline in services inflation in the coming months.
Economic Indicator
Gross Domestic Product s.a. (YoY)
The Gross Domestic Product (GDP), released by the Eurostat on a quarterly basis, is a measure of the total value of all goods and services produced in the Eurozone during a certain period of time. The GDP and its main aggregates are among the most significant indicators of the state of any economy. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Fri Feb 14, 2025 10:00 (Prel)
Frequency: Quarterly
Consensus: 0.9%
Previous: 0.9%
Source: Eurostat
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