Euro Lifted by Positive News, USD Lower After Employment Data

Market Reviews

The euro rose against the US dollar, receiving support from German data and comments from ECB representatives. In May, industrial orders in Germany increased more than expected. Data from the statistical office of Destatis showed that production orders increased by 2.6% in May after a decrease of -1.6% in April. Economists had expected growth of 1.1%. On an annualized basis, production orders increased by 4.4%, which is much more than in April, when orders increased by 0.8%. Economists forecast an increase of 1.7%.

It is reported that some members of the ECB believe that the rate increase at the end of 2019 is "too late". Against the background of this news, the probability of an increase in the rate by the regulator in September rose to 80%, which supported the euro.

The single currency was also supported by news about US-EU trade problem. It is reported, that German automakers are now ready to support the abolition of EU tariffs on cars imported from the US. The US ambassador to Germany reportedly told German automakers that President Donald Trump would suspend the process of imposing duties on cars imported from the EU if the bloc also canceled tariffs on American cars.

Major European indices are lifted by the trade news. German bund yields are also pushed higher. DAX rose by 1.44%, the CAC increased by 1.2% and FTSE gained 0.63%.

The British pound was up against the US dollar, with the GBP/USD pair updated 1.5-week high. The pound was supported by the comments of the head of the Bank of England Mark Carney, which strengthened expectations for a rate hike by the Bank of England in August. Carney said that signs of a weakening of the UK economy in the first quarter were obviously temporary. BoE governor also said that in the following years, higher interest rates will be required.

US dollar stays weak after slightly worse than expected employment data. ADP report showed 177k growth in private non-farm jobs, below expectation of 180k. Prior month’s figure, though, was revised up from 178k to 189k. Initial jobless claims grew by 3k to 231k in the week ended June 30, higher than expectation of 221k. Continuing claims increased by 32k to 1.74m in the week ended June 23.