Dollar slips vs euro after upbeat German economic data

The dollar slipped against the euro on Tuesday after a better-than-expected German economic sentiment survey boosted the common currency even as continued uncertainty about the outlook for U.S.-China trade talks kept large moves in the FX market in check.

The euro was 0.16% higher at $1.108 after the ZEW research institute’s monthly index on economic morale among German investors showed the mood improved far more than forecast in December, with an unexpected rise in October exports boosting hopes for an upturn in Europe’s biggest economy.

“Germanys ZEW expectation readings turned sharply positive possibly indicating a bottom is in place,” Edward Moya, senior market analyst at OANDA, said in a note.

“The current assessment remains deeply in negative territory but did improve and beat expectations,” he said.

The boost to the euro from the survey was unlikely to significantly change the euro’s direction against the greenback, John Doyle, vice president of dealing and trading, at Tempus Inc in Washington, said.

The common currency is down about 3.4% against the dollar this year.

Currency market moves on Tuesday were fairly muted as investors awaited developments from central bank meetings in the United States and Europe and as a Dec. 15 deadline for the next wave of U.S. tariffs on Chinese goods fed caution in global markets.

Investors are almost certain the Federal Reserve will leave rates unchanged when its two-day meeting ends on Wednesday, while the European Central Bank is likewise expected to keep interest rates steady on Thursday.

Investors were also awaiting the outcome of Britain’s general election on Thursday.

“Overall we are in wait-and-see mode for the dollar,” Tempus’ Doyle said.

“Central bank meetings and the UK election are the biggest risk events this week so we see volatility picking up a touch starting tomorrow afternoon,” he said.

U.S.-China trade talks remain in flux with little certainty about whether Washington will impose a new round of U.S. tariffs on Chinese consumer goods if the two countries are unable to agree on a limited trade deal by December 15.

The dollar was little changed versus the safe-haven Japanese yen at 108.58 yen.

The Chinese yuan – the currency most sensitive to the U.S.-China trade war – was little-changed against the U.S. dollar in the offshore market, last at 7.0313.

Sterling rose 0.24% against the dollar cementing recent gains as traders shrugged off weak economic growth data and kept an eye on the final days of campaigning before Britain’s general election on Thursday.

CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.