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Euro to US Dollar (EUR/USD) Pairing Softens Despite Favourable Retail Sales Data

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At the time of writing (14:12 GMT) The Euro/US Dollar pairing stands at 1.3384, ebbing between a low of 1.3378 and a high of 1.3425.

The pairing has fallen by -0.28% in spite of some fairly positive retail sales figures for the Eurozone. The sales figures were expected to improve from 0.6%, forecasted to rise to 1.4%. The actual data showed the retail sales figures escalating to 2.4%, a 1% increase on the predicted percentage.

On Monday the Euro-Zone Sentix Investor Confidence reported an unexpected result.

The measure of sentiment previously came in at 10.1 and the forecast figure was a drop to 9.0. However the actual data showed a massive decline with the measure falling to 2.7. Following the release of this data the Euro showed a loss against the ‘Greenback’.

Today, however, investor faith was restored following favourable year-on-year Eurozone retail sales data.

The report indicated an increase in retail sales having risen to 2.4% from a predicted 1.4% after a previous figure of 0.6%.

The numbers ignited fresh demand for the Euro, especially having followed the positive results from the Spanish Jobless report.

Demand for USD is sure to increase following positive results from the ISM Non-Manufacturing Composite. June saw a figure of 56.0 with a forecasted climb to 56.5 for July.

The actual results from today’s report showed a massive increase of 2.7 to 58.7. The U.S. Services PMI indicated another strong rise following June’s record high. Whilst slightly lower than June (61.0), July’s services sector posted positive results (60.8). This is a sign of ongoing strength in the US services sector and trader assurance in the USD.

Chris Williamson, Chief Economist at Markit, confirmed this stating; ‘The elevated survey readings suggest that the economy is on course to grow strongly again in the third quarter, building on the 4.0% annualised expansion of GDP seen in the second quarter’.

This is no certainty, however, as the surveys indicate job creation has slowed and business confidence is at its lowest since late 2012.

Williamson went on to say; ‘While the economy looks set to continue to expand at a robust pace in the second half of the year, these summer months may turn out to represent the peaking in the rate of growth’.

Tomorrow may see fluctuation in the strength of the Euro, with the upcoming German Factory Orders report.

Forecast figures show a decrease from the previous month at 5.5% to 1.1%. Another report likely to spark change is the German Construction PMI. Previously at 45.5 the hope is that it will reach 50 or higher, although there is no forecast figure at this time.

Also the Euro-Zone retail PMI will effect a change. It was at 50 for the month of June and currently there is no forecasted figure for July.

The USD Trade Balance report due tomorrow will have an impact on the USD/EUR pairing. Last month posted a figure of -44.4 billion USD, with a forecast of -44.8 billion USD.