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Further good news for euro in early trading

The common European currency sustained its run of good luck on Thursday and into Friday as the dollar continued to suffer at the hands of the shifting US-China trade landscape.

The EUR/USD pair reached almost $1.14 on Friday, which would mark a significant milestone for the currency. It got as far as $1.1385, with potential to rise.

This was due in part to the recovery of the Turkish lira, especially after officials both in Turkey and beyond moved to stabilise the lira following a spell of difficulties for the currency.

The country’s finance minister Berat Albayrak held a call designed to show international investors that the country would take concrete steps to deal with inflation issues when its Medium-Term Economic Plan was released.

The euro also benefitted from increased market awareness of the fact that European banks do not experience excessive exposure to the financial system in Turkey.

The euro’s relatively strong performance was in part due to this. However, one of the main secondary reasons for the euro’s boost was a shift among traders as to which currencies are the safest bets in an environment of uncertainty.

This role was previously assigned to the dollar, but investors have begun looking elsewhere after it was revealed this week that the US and China are set to sit down for discussions around their ongoing trading relationship.

Chinese officials will visit the USA to meet with David Malpass, a junior minister in the treasury department.

“China welcomes communications and dialogue on the basis of reciprocity, equality and integrity,” the Chinese commerce department said in a press statement.

The news may be good for American manufacturers, but investors in the dollar appear to prefer a tariff-heavy economy. The dollar index, which looks at the currency’s performance against a basket of other global currencies, dropped by 0.1% to 96.513.

Looking at the forex market more broadly, there are a range of significant events on the horizon coming up over the next few days.

Some important Chinese data releases are due at the start of the week. On Monday, for example, the year-on-year M2 money supply figures for July will be published, while new loans information for July will also be released.

On Tuesday, China’s industrial production and retail sales information for July will be made public too, as will its fixed asset investment information. Industrial production data for fellow major East Asian economy Japan will also be out on that day.

The main focus on Tuesday, however, will be in Germany, where the harmonised index of consumer prices for July will be released at 06:00 GMT.

Tuesday will also see unemployment figures released in Britain, as well as average earnings figures for June.

Looking ahead towards the end of the week, Australia has a number of major releases planned for Thursday. Its unemployment, employment change and participation rate data will all be made available during the night, while there will also be some data on expectations for consumer inflation for August.

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