The US dollar is once again testing how close it can get in value to the euro, supported this time by positive data from the American labor market and weaker performance from Germany’s economy.
Inflation Accelerates in the Eurozone
Yesterday’s data revealed that inflation in the Eurozone increased as expected, from 2.2% to 2.4%. At the same time, the core inflation rate remained unchanged at 2.7%. While the stability in core inflation is reassuring, its elevated level above the consumer inflation rate suggests a potential issue. If the prices of the most volatile components stabilize at this higher rate, overall prices could still rise further. However, these levels remain below the threshold of concern, as the target rate is set at 2%.
US Labor Market Surprises Positively
Yesterday’s job openings data delivered a significant surprise. The market had expected 7.7 million vacancies, but the actual figure came in at 8.1 million. A higher number of open positions is good news for the dollar, indicating a healthy outlook for the US labor market. Combined with recent data on new unemployment claims, this paints a picture of a potential drop in the unemployment rate. As a result, investors showed renewed enthusiasm for the US dollar yesterday, pushing its exchange rate from around 4.08 PLN to 4.12 PLN.
Weak Data from Germany
As if yesterday’s dollar rally wasn’t enough, this morning brought disappointing news from the Eurozone’s leading economy. Industrial orders in Germany fell by 5.4% month-on-month in November, compared to market expectations of no change. This significant deviation has further supported the dollar’s continued strengthening against the euro. While the exchange rate hasn’t yet reached the levels seen on January 2, it is edging closer to the 1.03 USD per euro mark. Evidently, markets are not giving up on the possibility of parity between the dollar and the euro.
Key Macroeconomic Data to Watch Today:
- 2:15 PM (CET) – USA – ADP employment report
- 2:30 PM (CET) – USA – Weekly jobless claims
The rescheduling of macroeconomic data from Thursday to Wednesday is due to a national day of mourning in the US tomorrow, following the passing of former President Jimmy Carter. As a result, jobless claims will be released today instead of the usual Thursday schedule.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
Source: ManagerPlus.pl
