Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Why Euro Could Still Hit 3-Year Lows, Chinese GDP Next

By Kathy LienForexApr 16, 2020 18:09
ca.investing.com/analysis/why-euro-could-still-hit-3year-lows-chinese-gdp-next-200435668
Why Euro Could Still Hit 3-Year Lows, Chinese GDP Next
By Kathy Lien   |  Apr 16, 2020 18:09
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
EUR/USD
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/USD
-0.85%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NZD/USD
-0.46%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
+0.12%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
If there’s one thing that’s certain in forex, it is that the U.S. dollar is king. The greenback traded higher against most of the major currencies despite another round of worrisome data. More than 5.2 million people filed for jobless claim benefits last week, housing starts fell by the largest amount in three decades and the Philadelphia Fed index hit a 45-year low of -56.6. Yet, the data wasn’t as terrible as the market had feared. Economists were looking for claims to rise by 5.5 million with investors bracing for another 6 million print. Building permits also fell less than expected. However, the reaction in equities and currencies confirms that other investors are not optimistic. In fact, the primary reason for the dollar’s strength is ongoing pessimism. 
 
For the past few weeks, we’ve been talking about why the greenback rises on good news and bad because investors perceive the outlook for the rest of the world to be worse. This is one of the reasons why the euro could test its 3-year low of 1.0636 versus the U.S. dollar. While Europe slowly crawls out of the depths of the COVID-19 shutdown, the region was the second major hotspot, which means economic data will worsen more quickly. We’ve mostly seen February and March data, such as this morning’s Eurozone industrial production numbers, which showed a modest 0.1% decline in February. The April numbers will be ugly. European nations are also restarting business activity sooner than the U.S., which can be positive or negative for the currency depending upon whether they learn from Asia’s mistakes or see a second wave of cases. 
 
There’s still a lot to be worried about for the U.S., especially after the small business loan program, which officially ran out of money today. Aside from the loans running dry, the distribution is running weeks behind. Most small business owners are reporting that money has not been received and the longer this continues, the greater strain it puts on the economy and the longer it takes for recovery.
 
The Australian dollar’s reaction to last night’s labor market numbers is another example of investors taking good data with a grain of salt. Economists were looking for the country to shed 30,000 jobs, but instead Australia added 5,900 jobs. The unemployment rate also ticked up to only 5.2% against 5.4% forecast. The data could have been much worse but lockdown rules did not really begin until the fourth week of March in Australia, so the bulk of the job losses would have been in April. 
 
The Australian and New Zealand dollars should remain under pressure ahead of key Chinese data. First quarter GDP, industrial production and retail sales numbers are scheduled for release. Economists are looking for GDP to contract by 12% in the first quarter, but smaller declines are expected for retail sales and industrial production. We haven’t seen a double-digit decline in quarterly GDP growth for China since its economic reforms in the late 1970s. The real contraction is probably much worse than 12%, and it will be interesting to see if they show that deterioration or try to show a more moderate slowdown. 
Why Euro Could Still Hit 3-Year Lows, Chinese GDP Next
 

Related Articles

ING Economic and Financial Analysis
FX Daily: Corrective Forces Build By ING Economic and Financial Analysis - Oct 18, 2022

A reversal in UK fiscal policies, some stability in equity markets, and a dip in European energy prices point to a further corrective period in FX markets. The dollar could weaken...

Why Euro Could Still Hit 3-Year Lows, Chinese GDP Next

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email