EUR/USD in reverse. Weaker data and lack of support for the euro.

Thanksgiving is a day when Americans switch off the stock market charts. The absence of US investors was supposed to be an opportunity for the European Union currency to strengthen against the dollar. However, this is not happening. On Thursday, the euro is showing respect to its counterpart across the ocean. The exchange rate of the world’s major currency pair is slightly, but still, falling towards the south. Behind the scenes, the date for an important OPEC+ meeting has been changed.

Fight for oil prices

This morning, news circulated in the media about the postponement of the OPEC+ meeting from the first to the fifth of December. The meeting is set to discuss further oil production, especially for the year 2025. The Saudis are keen on limiting production, which is intended to drive up the price of “black gold”. However, on the other side of the barricade are other members of the cartel, who do not share this enthusiasm. Thus, the postponement of the talks is due to internal conflict. This turmoil is stimulating investors’ imagination, who are now considering the scenario of a larger (than expected) extraction by OPEC. Such a development would simultaneously benefit Trump, who also promises to increase production in order to lower oil prices and therefore inflation in the USA.

In addition, yesterday saw the release of the latest data on oil stocks from the States. The publication showed a decrease of 1.84 million barrels, which was a deeper slump than the expected -1.2 million. A lower supply usually boosts oil prices, but news of a possible increase in production effectively dampens upward aspirations. The effect of mixed sentiments is a lack of clear direction for the commodity’s quotations. In the case of the American WTI variety, the exchange rate has been fluctuating between 68-69 USD since yesterday, while on the BRENT chart, it is in the range of 71.80-73 USD.

Inflation Across the Ocean is Rising

Apart from yesterday’s publications on oil reserves, a report on American spending also hit the market. The publications were in line with market forecasts, indicating a slight increase in price dynamics. Consumer inflation in annual terms rose from 2.1% to 2.3%. Its base equivalent jumped by 0.1 percentage point, stopping at 2.8%. Data compared monthly were also consistent with consensus and were 0.2% m/m and 0.3% m/m respectively. Equal results to expectations did not bring either volatility to the market, nor a change in direction for the world’s main currency pair, which moved northward until the end of Thursday’s session.

Thursday Without America

Since there are no Americans in the market today, many investors have been eyeing the euro since the morning, which had the chance to further rub the dollar’s nose. Yesterday’s rise in the EUR/USD rate ended at 1.058 USD. Contrary to expectations, by noon today, the quotations of the world’s main currency pair could not break it and were slightly falling. The euro was not helped by the readings of price dynamics from Germany, which turned out to be lower than expected. CPI inflation is 2.2% y/y (forecast 2.3% y/y), and the HICP index is 2.4% y/y (forecast 2.6%). Shortly after the publication, the EUR/USD exchange rate fell to 1.054 USD. If the level is breached, the next stop may be round 1.05 USD. The current situation does not put the euro in a good position before tomorrow’s return of the Americans to the game.

Author: Dawid Górny, Currency Analyst Walutomat.pl