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27/11/24
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EUR/USD Steady Amid US Economic Data Anticipation and Political Developments
The EUR/USD currency pair remains stable after experiencing losses earlier, trading at approximately 1.0480 during the Asian session on Wednesday. Market participants are looking ahead to the impending release of significant US economic data, particularly the Personal Consumption Expenditure (PCE) Price Index and the quarterly Gross Domestic Product (GDP) Annualized figures, which are set to be unveiled later in the North American trading session.
The US Dollar is under some pressure due to emerging optimism in the bond market. This optimism follows the announcement of appointments by President-elect Donald Trump, who has nominated Scott Bessent, a veteran fund manager and fiscal conservative, for the position of US Treasury Secretary. Additionally, the recent Minutes from the Federal Open Market Committee (FOMC) meeting on November 7 indicate that policymakers are adopting a measured approach to interest rate adjustments. Although there is a general consensus that risks to employment and inflation are easing, officials have signaled that a rapid increase in rate cuts is unlikely unless there are significant downturns in the labor market and a notable decline in inflationary pressures.
In the political arena, Trump is also expected to appoint Jamieson Greer as the U.S. Trade Representative, emphasizing the pivotal role of tariffs in his administration’s economic policy. Trump’s renewed threats of tariffs against trading partners like China, Mexico, and Canada have contributed to a decrease in market sentiment, putting additional downward pressure on European economies. Consequently, the Euro, being sensitive to risk factors, faces difficulties in gaining momentum in this challenging environment.
Amid these developments, the European Central Bank (ECB) is anticipated to implement a 25-basis-point rate cut in December, with the potential for a larger 50 basis point cut now at 58%. This reflects growing anxiety regarding the Eurozone’s economic outlook, as markets have largely priced in these policy adjustments in response to prevailing economic conditions.
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