(BFM Bourse) – The euro zone currency is suffering from weak activity indicators in the monetary union, unlike the greenback which, on the contrary, is buoyed by favorable American statistics as well as by its value status refuge.
If the stock markets are having a difficult summer, the same is true for the euro-dollar pair. This Thursday the currency of the euro zone drops another 0.28% against the greenback around 3:15 p.m., to settle at 1.0696 dollars, its lowest level since March.
Compared to its peak of $1.1277 reached in July, the euro has fallen by 5%. This constitutes a significant movement on the foreign exchange market which, due to its immense liquidity (7,500 billion dollars of trade per day in April 2022, according to the Bank for International Settlements), is experiencing very moderate variations in absolute terms.
The renewed uncertainty on the markets works in favor of the American currency. Essentially the currency of international trade, the dollar benefits from its status as a safe haven when times get tough.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
Risk aversion and economic divergences
“Risk aversion, in the middle of the month (of August, editor’s note), unsurprisingly supported the American dollar”, notes Ostrum Asset Management.
Divergences in economic conditions between the United States and the euro zone are also strengthening the greenback. The latest economic indicators, notably the PMI indices, which measure private sector activity, have been disappointing for the monetary union.
This is still the case on Thursday: the evolution of the gross domestic product (GDP) of the euro zone for the second quarter was revised to +0.1% against +0.3% in the first estimate. Furthermore, in Germany, industrial production fell by 0.8% over one month in July, for the third consecutive month.
Conversely, American GDP was revised upwards at the end of August, to 2.4% on an annualized basis compared to 2.1% previously. Goldman Sachs bank two days ago lowered its recession probability estimate for the US economy over the next 12 months from 20% to 15%, according to CNN. In March, Goldman Sachs was still at 35%. The American bank is counting on a “soft landing”, that is to say, to simplify, that inflation will return below an acceptable level without causing a recession.
“We are seeing a marked slowdown in growth outside of the United States and in this environment the dollar will do well, especially as the Fed continues to show firmness,” for his part said. to Bloomberg Peter Kinsella, head of global currency strategy at asset manager Union Bancaire Privee Ubp SA.
Julien Marion – ©2023 BFM Bourse