EUR/USD experiences an increase of more than 0.20% on Monday, driven by concerns regarding a potential government shutdown in the US. Meanwhile, Eurozone data indicates an improvement in sentiment, yet it did not provide sufficient momentum to elevate the shared currency further. Currently, the pair is trading at 1.1726, having reached a daily low of 1.1701.
The Euro remains positioned above 1.1720 following the Democrats’ rejection of the Republican bill, which intensifies worries regarding a potential US government shutdown. Musalem and Hammack from the Fed emphasize the risks associated with inflation, while Williams observes a gradual cooling in the labor market. Consumer sentiment in the Eurozone shows improvement; however, it continues to fall short of the average, which restricts momentum even in the context of widespread weakness in the US Dollar.
> Shared currency experiences slight gains as political stalemate in Washington dampens market sentiment : The Greenback is experiencing a decline against the majority of G10 FX currencies as US President Donald Trump engages with the Democratic leaders of the House of Representatives and the Senate. US Senate Democrat leaders Schumer engaged in discussions with Trump, stating, “We have large differences.” Democratic House of Representatives leader Jefferies stated that they would not endorse a partisan Republican bill that negatively impacts healthcare. Vice President Vance indicated that the US is on the path to a shutdown following discussions with Democrats. The recent US housing data showed positive trends, although comments from Federal Reserve officials varied in their outlook. St. Louis Fed President Alberto Musalem adopted a hawkish stance, indicating that inflation expectations are “somewhat high” while acknowledging a softening in the labor market. Cleveland’s Fed Beth Hammack stated that inflation remains elevated and that the trajectory is unfavorable. New York Fed’s John Williams indicated that the current policy is restrictive, yet capable of exerting downward pressure on inflation. He also noted that the resilient labor market is gradually showing signs of softening. During the European session, there was an uptick in Consumer Sentiment within the Eurozone; however, it still fell short of the historical average. This week, the agenda includes the ADP National Employment Change, ISM Manufacturing PMI, Initial Jobless Claims, and September’s Nonfarm Payrolls.
Latest FX Rate Trends : EUR/USD rises even with robust US housing data
- In August, US Pending Home Sales experienced a robust rebound, increasing by 4% month-over-month following July’s upwardly revised contraction of -0.3%. This performance significantly surpassed expectations, which had anticipated a modest gain of 0.3%. The core PCE data from last week met expectations, bolstering the outlook for additional easing from the Fed.
- The futures market for Fed funds indicates an 89% likelihood of a 25-basis-point reduction in October, while a more substantial 50-basis-point adjustment is assigned only an 11% probability, as per the rate probability tool from Prime Market Terminal.
- In the Eurozone, September Consumer Confidence showed a modest improvement to -14.9 from -15.5, while Industrial Confidence experienced a slight decline to -10.3 from -10.2, yet remained above the forecasts of -10.9. Services Sentiment declined to 3.6 from 3.8, falling short of the consensus estimate of 3.7.