Euro Higher on German Data, US Dollar Gets No Support From ADP Report
The euro strengthened against the US dollar, rising above $1.1600 level after falling to multi-month lows near $1.1500 the day before. The EUR/USD pair is growing against background of the fall of the dollar index and Germany's strong economic performance.
Today's data showed, that German inflation rose at a faster pace than expected this month, topping the European Central Bank's target level. The consumer price index rose 2.2% in May, compared with the same month a year earlier. Economists had expected annual inflation to increase 2.0% after rising 1.6% in April. Consumer prices, harmonized to compare with other Eurozone countries, grew by also 2.2% from the previous year, above forecasts of 1.8% and compared to a 1.4% growth in the previous month. Also, from Germany, unemployment rate fell to 5.2% in May (the lowest since German reunification in 1990).
Eurozone business climate increased to 1.45 in May from 1.39 in April and exceeded forecast of 1.30. Economic confidence fell to 112.5, from 112.7 but beat expectation of 112.0. Industrial confidence also declined to 6.8, down from 7.3 but met forecast. Services confidence fell to 14.3, from 14.7 but was in a line with forecast. Consumer confidence was finalized at 0.2.
The US dollar stays under pressure of US-China trade tension and gets no support from today’s data. ADP report showed private sector jobs grew by 178k in May, below forecast of 190k. Q1 GDP growth was revised down to 2.2% qoq from 2.3%. GDP price index was revised down from 2.0% to 1.9%. Wholesale inventories rose 0.0% versus expectation of 0.5% in April. Trade deficit narrowed slightly to USD -68.2B, from USD -68.3B.
Organization for Economic Cooperation and Development (OECD) forecasts global growth to be at around 3.8% in 2018-2019, while G20 growth would be 4.0%. According to the forecasts, the British economy will expand by 1.4% this year before slowing to 1.3% in 2019.