Euro remains subdued against dollar

Published on 17.05.2023 11:07

The Euro continues to be subdued against the US dollar as we enter today’s European trading session after a round of positive data from the US yesterday has helped keep on track the planned rate hike from the US Federal Reserve next month.

Retail sales in the United States returned to growth in April, data released on Tuesday showed, but not by as much as many had anticipated.

The figure rose by 0.4 percent in April from a month earlier to $686.1 billion, the Commerce Department said in a statement, up from a revised decline of 0.7 percent in March but below analysts’ expectations for a figure of 0.8 percent.

The U.S. Federal Reserve has hiked interest rates 10 times in a row since last year in a bid to suppress demand and slow inflation. The smaller increase in sales suggests the policy is beginning to have an impact which may culminate in the fed delivering their final 25 basis point rate hike next month.

The other big news yesterday was the release of GDP figures from the Eurozone which hit the market at 0.1 percent quarter-on-quarter in the first three months of the year, the EU's statistics agency confirmed on Tuesday, with rising employment and a sharp increase in exports that boosted the euro zone trade surplus.

Eurostat also confirmed its earlier estimate that gross domestic product in the 20 countries sharing the euro rose 1.3 percent year-on-year in the January-March period and said employment grew 0.6 percent on the quarter for a 1.7 percent year-on-year rise.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of CPI figures from the Eurozone which will be closely watched by market participants and will be a deciding factor on whether the European Central bank will hike interest rates next month.

From the US traders will await key real estate data with the release of the latest building permits figure and housing starts numbers.