The Euro to US Dollar (EUR/USD) exchange rate declined by around -0.4% on Thursday afternoon.
In response to disappointing German economic data, the shared currency slumped versus its currency rivals. The preliminary result for July’s German Consumer Price Index came in at 0.2%; below the median market forecast 0.3%. The slowdown in inflation has been linked to a sharp drop in energy prices as a result of plummeting commodity prices.
The US Dollar, meanwhile, has seen subdued trade during Thursday’s European session despite a plethora of influential domestic data publications. The lack of movement can be linked to mixed results from domestic data publications. Whilst Gross Domestic Product bettered estimates, and previous growth figures were upwardly revised, business investment slumped. Initial Jobless Claims came in under the median market forecast, but Continuing Claims eclipsed the market projection.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0918.
Euro (EUR) Exchange Rate Forecast to Soften against the US Dollar (USD) After Negative German Labour Data
The Euro to US Dollar (EUR/USD) exchange rate edged lower by around -0.2% on Thursday afternoon.
In the early stages of Thursday’s European session, the shared currency was trending lower against its currency competitors. This was the result of fading confidence in Greece’s domestic political standing as Prime Minister Alexis Tsipras fights to win back support from his own party members. A lack of faith from Syriza back benchers has forced Tsipras to consider a snap election. This could see another complete shift in policy within a short space of time. With financial institutions on life-support, Greece cannot afford another long period of political uncertainty.
German labour market data printed poorly on Thursday with July’s German Unemployment Change seeing -9,000 newly unemployed; eclipsing the median market forecast -5,000. The seasonally-adjusted Unemployment Rate equalled the market consensus of 6.4%. With German inflation data yet to come, Thursday’s European session is likely to see Euro volatility.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0961.
US Dollar (USD) Exchange Rate Forecast to Edge Higher against the Common Currency (EUR) Despite Fed’s Lack of Vision
As most analysts had predicted, the Federal Open Market Committee (FOMC) opted to hold the official cash rate at this juncture. The accompanying statements were somewhat vague, however, which saw a muted response from traders. The Dollar is trending relatively statically versus its currency peers amid divided opinion as to whether the central bank will consider a September rate hike liftoff. Whilst praising the improved jobs market, officials barely addressed the lack of inflationary pressure and the commodities price crash, or how the slowdown in China will affect the market. The lack of vision has caused some traders to fear that the FOMC will return to the ‘patience’ rhetoric.
‘They slightly lowered the hurdle for a rate hike by adding the word ‘some’ to their conditions required for further improvement in the labour market,’ said Shyam Rajan, head of US interest rate strategy at Bank of America Merrill Lynch.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0939 during Thursday’s European session.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Edge Lower ahead of US GDP
With significant US and German economic data due for publication later on Thursday afternoon, the Euro to US Dollar (EUR/USD) exchange rate is likely to trend statically on Thursday morning. German inflation data should provoke volatility for the single currency. US Gross Domestic Product is certain to influence US Dollar movement and US Personal Consumption is also likely to be impactful.
Looking further ahead, Friday’s European session should see EUR/USD volatility with Eurozone inflation data due for publication. In addition, US University of Michigan Confidence will also provoke changes. Meanwhile, geopolitical developments in Greece have the potential to overshadow domestic data publications.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.0985 during Thursday’s European session.