The dumping of US Treasury bonds has meant that the EUR/USD currency pair saw a 0.6% decline. As well as the Euro trading at $1.178. The US Dollar also fell when compared to many off the other currencies.
The broad-based sell-off came about after China stated it would decrease duty on imports from countries except for the US. The selloff can also be attributed to the fact China is adamant that the value of its currency cannot be lowered.
There have been some ongoing tensions in relation to trade between the US and China. China’s foreign minister feels that the US hasn’t been transparent when trying to form trade agreements.
The EUR/USD exchange rate remained stable, showing an interbank rate around $1.17. Despite current talks not going as planned, this hasn’t created a demand for a safe haven. There is a lot of concern that upcoming tariffs will have a negative impact on USD and the economy in general moving forward.
EUR/USD Could Benefit from Eurozone Growth
The EUR could be bolstered if the PMIs provide by the Eurozone’s manufacturing and services PMIs seem robust.
The reason for this is because investors would have more confidence in the currency, as long as there is no impact from trade tension elsewhere. Despite a slight PMI dip of 54.6 being expected, there is plenty of opportunity for the EUR/USD exchange rate to increase.
Solid PMIs Could Also Safeguard USD
Despite the USD being in a sensitive position, this doesn’t mean that the currency exchange rate can’t improve, as long as there are PMIs that show an improvement. There is the fact that some markets focus on ISM sector surveys, but strong PMIs could be a potential safeguard against other factors affecting the currency ay the moment.
The biggest effect on USD can be attributed discussions between China and the US, which still has no solid agreement in place.
US Construction Numbers Give Mixed Results
Although the Building Permits were expected to reach 1.31 million showed a drop to 1.23 million, Housing Starts saw an increase from 1.17 million to 1.28 million, surpassing the initial estimate of 1.23 million.
Although a mixed result, it does show that the potential is there for the USD to grow moving forward.
GBP Is Higher, Despite Earlier Low
USD isn’t the only currency that has been shrouded in uncertainty, as the pound sterling forecast wasn’t looking favourable due to conflicts between the EU and the UK. However, as time has gone, markets are now confident that a Brexit agreement is more feasible.
The retail sector has also helped raise the GBP to 1.32, with markets expecting 1.33. the pound sterling forecast has also helped EUR stay afloat.
As ever, exchange rates can fluctuate depending on what actions are being taken in the market, and ow discussions in relation to future trade deals span out.
Despite its fragile state, the EUR/USD pairing remains robust, especially given the uncertainty of other factors currently surrounding the pairing.