Stéfane Marion and Krishen Rangasamy, analysts at National Bank of Canada, see that Eurozone’s weak economic growth and monetary policy loosening do not bode well for the euro, but it still can rise temporally, especially if the USD loses steam.
Key Quotes:
“While the trade-weighted USD has room to appreciate further over the medium term, it could find itself under pressure over the near term if the White House engages in verbal or actual currency intervention or if, as we expect, U.S. data shows a deceleration in economic activity.”
“The euro took a beating in July, hammered by weak economic data and a dovish European Central Bank. The eurozone’s GDP grew just 0.8% annualized in Q2 or just 1.1% year-on-year, contrasting sharply with the U.S.’s 2.3% year-on-year growth print.”
“The trade war is wreaking havoc by reducing trade volumes and hence restraining GDP growth in the zone’s export-centric economies such as Germany. The latter’s manufacturing PMI, which sank to an 84-month low of 43.1 in July, demonstrates the extent of the damage in the eurozone’s largest economy.”
“Weak economic growth and monetary policy loosening do not bode well for the euro. That’s not to say, however, the common currency can’t perk up temporarily especially if, as we expect, the USD loses steam over the near term. We have left unchanged our end-of-year target of 1.14 for EURUSD.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Next stop emerges at 0.6580
The downward bias around AUD/USD remained unabated for yet another day, motivating spot to flirt with the area of four-week lows well south of the key 0.6700 region.
EUR/USD looks cautious near 1.0900 ahead of key data
The humble advance in EUR/USD was enough to partially leave behind two consecutive sessions of marked losses, although a convincing surpass of the 1.0900 barrier was still elusive.
Gold extends slide below $2,400
Gold stays under persistent bearish pressure after breaking below the key $2,400 level and trades at its lowest level in over a week below $2,390. In the absence of fundamental drivers, technical developments seem to be causing XAU/USD to stretch lower.
Breaking: SEC gives final approval for Ethereum ETFs to begin trading tomorrow
The Securities and Exchange Commission approved the S-1 registration statements of spot Ethereum ETF issuers on Monday, according to the latest filings on its website. Following the approval, issuers have started making moves as the products are set to begin trading on exchanges tomorrow.
What now for the Democrats?
Like many, I applaud Biden’s decision. I would have preferred that he’d made it sooner, but there’s still plenty of time for the Democrats to run a successful campaign. In fact, I wish something on the order of a two-month campaign – as opposed to a two-year campaign – were the norm and not the exception.