- Single currency drops overall after yesterday’s events – Markets remain generally depleted
- US Dollar similarly weak after Bullard comments – Fed official sees no recession in store
- Eurozone manufacturing stats incoming – US variants also on offer today
The single currency has started the day on a low note, as have many of the world’s major currencies. In addition to mounting concerns about the widening impact of the ‘Brexit’ decision, the fact that no firm leader has emerged for the UK’s leadership has done little to generate feelings of stability among investors.
The US Dollar has trended in a tight range overall, though comments from the Fed’s James Bullard have offered some support due to reduced estimations of a recession.
Looking ahead, the near-term will bring stagnation-predicted manufacturing results for June, as well as the US’s no-change predicted variant later on.
(Last updated 09:26 June 30th, 2016)
The Euro (EUR) has been a fairly stable option against the US Dollar (USD) recently, though the rest of the week has the potential to bring further impactful comments from European Union officials. Speeches from UK financial officials like BoE Governor Mark Carney could also have an impact on the EUR/USD and EUR/GBP exchange rates as further ramifications from the UK’s decision to Brexit emerge.
The US Dollar has been in low demand since Tuesday, having been dropped by investors after excessive profit-taking and reduced odds of a near-term interest rate hike.
Eurozone Economic News: EU Leaders Raise the Stakes for ‘Brexit’ with Firm Stance on UK
Although yesterday brought with it a wide array of mixed Eurozone confidence printings, one of the biggest developments in the single currency bloc actually occurred on a political level, when EU leaders (sans David Cameron) met to discuss the potential terms of the UK’s exit from the EU.
While some economists have predicted that without the UK as part of the EU, calamity will ensue for the remaining 27 countries, EU leaders were nonetheless ‘playing hardball’ when it came to giving and receiving from the UK, specifically in regard to accessing the single market without having the free movement of EU citizens into the UK.
In a statement released after the meeting of EU leaders, the heads of state said:
‘Any agreement, which will be concluded with the UK as a third country, will have to be based on a balance of rights and obligations. Access to the single market requires acceptance of all four freedoms (movement of goods, capital, services and workers)’.
US Dollar Slumps after Fed Comments Leave Near-Term Rate Hike in Doubt
The US Dollar has been soft against most of its peers for most of the present week, on account of faith in the US economy waning considerably.
One notable piece of damage to investor expectations has been done by Fed member Jerome Powell, who has stated that even before the occurrence of ‘Brexit’ last week, the chances for a US interest rate hike were extremely slim. Although Powell did not rule out a US interest rate hike in 2016, most economists are of the opinion that a rate hike is off the cards until 2017 at the earliest.
Future EUR, USD Forecast: German Unemployment Data and US Claims Printings due Today
The day ahead will first bring contributions from the Eurozone, in the form of Germany’s unemployment rate results for June, which are expected to show a stagnation at 6.1% for the actual rate, despite the number of employed being in for a -11k drop.
Following on from this a few hours later will be the Eurozone-wide core and base inflation rate flashes on the year for the same month, which have both been predicted to improve.
The US’s offerings which could affect the EUR/USD exchange rate will include the early afternoon’s continuing and initial jobless claims results for mid-late June; in both cases, the number of claims made is expected to increase, which would usually devalue the ‘Buck’ under normal conditions.
Closing off today’s economic events will be a speech from Fed official James Bullard in the evening.
Recent EUR, USD Exchange Rates
The Euro to US Dollar (EUR/USD) exchange rate has been trending in the region of 1.1119 and the US Dollar to Euro (USD/EUR) exchange rate has been trending in the region of 0.8996 recently.