EUR/USD is flat on Friday, as the pair trades in the high-1.22 range in the European session. The euro remains under pressure and has lost over 200 points since the start of trading on Wednesday. On the release front, the forecast for German Consumer Climate stands at 9.0 points, very close to the forecast of 8.9 points. German PPI improved to 0.0%, but Eurozone Current Account slipped to EUR 20.5 billion. There are no US releases on Friday, so we could see EUR/USD remain listless as we wrap up the trading week.
There was more good news from Germany, helping the shaky euro remain stable on Friday. The January forecast for German Consumer Climate came in at 9.0 points, a notch above the estimate of 8.9 points. This marked the fourth straight rise for the indicator, pointing to stronger optimism from consumers as we head into the New Year. These strong numbers come on the heels of German Business Climate, which improved to 105.5 points, up from 104.4 a month earlier. This edged above the forecast of 105.4 points. On the inflation front, German PPI, which tracks manufacturing inflation, improved to 0.% in November, up from -0.2% a month earlier. Like the consumer confidence indicator, this release is on an upward trend. Strong German consumer and business confidence numbers are welcome news, as the Eurozone economy continues to struggle.
The shaky euro took another tumble on Wednesday, courtesy of the Federal Reserve. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, although most likely not before April. The news of a likely US rate hike in 2015 sent the euro sprawling, as the currency lost about 170 points on Wednesday and finds itself at 2.5 year lows against the surging US dollar.
EUR/USD 1.2274 H: 1.2298 L: 1.2271
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