- Single currency climbs in some pairings after trade data – Mixed results limit overall gains for Euro
- US Dollar takes a hit after production drops – Outcome is worse-than-expected
- Warnings of ‘storm brewing’ for US economy – Economist predicts chaos in corporate sector
- Eurozone inflation rate stats out tomorrow – Latest Fed interest rate decision also incoming
Euro US Dollar Drops 0.8%
Following the publications of the US Consumer Price Index, the Euro to US Dollar exchange rate plummeted to a low of 1.1129.
The US data showed that annual consumer prices unexpectedly declined in May. This had minimal impact on demand for USD, however, as damp market sentiment continues to drive market volatility.
(Previously updated 16:52 16/06/2016)
EUR/USD Exchange Rate Climbs after FOMC Announcement
In the wake of the Federal Reserve’s interest rate decision the Euro US Dollar exchange rate climbed.
While the decision to leave rates on hold was far from unexpected given recent soft US labour data and ongoing concerns regarding the potential impact of the UK’s EU referendum, the inaction was enough to send the US Dollar lower across the board.
The ‘Greenback’ softened against peers like the Euro and Pound while higher risk currencies like the Australian and New Zealand Dollars benefited.
The EUR/USD currency pair was left trending in the region of 1.1254
Reuters commented: ‘Updated projections from Fed policymakers point to annual GDP growth of only 2 percent for the foreseeable future, slightly lower than forecast at the March policy meeting. Policymakers have been worried about potential weakness in the US labour market and the possibility of financial turmoil if Britain votes next week to leave the European Union. The Fed statement on Wednesday made no reference to that vote.’
(Previously updated 13:23 15/06/2016)
The Euro has been giving a fairly indecisive performance for the most part today, with earlier domestic data failing to either decisively push the common currency up or down against its peers.
The US Dollar has been a more consistently poor option, having taken a hit to its overall appeal on account of dwindling confidence in the US economy.
Eurozone Economic News: Euro-Bloc Trade Balance Drops while Irish Variant Improves
The single currency has been a decidedly mixed option for investors lately, with gains consisting of 0.3% against the Canadian Dollar (EUR/CAD) along with a fractional gain against the US Dollar (EUR/USD). More prevalent losses have included -0.3% against the Pound Sterling (EUR/GBP) and -0.6% against the Australian Dollar (EUR/AUD).
The day’s Eurozone ecostats have consisted mainly of the April trade balance data; the big Eurozone-wide figure fell in its base form, from 28.6bn to 27.5bn. More supportively, however, the later-released Irish balance of trade stats showed an increase in April from 3.7bn to 4.5bn.
Although this news was broadly positive for the single currency bloc, with the seasonally adjusted trade surplus widening to its highest level on record IHS economist Howard Archer stated that:
‘Eurozone exporters will be very worried that the UK votes to leave the EU in next Thursday’s referendum, as this would likely not only weigh down heavily on growth in the U.K., which is a major export market, but would also likely have significant negative repercussions for growth throughout Europe at least’.
US Dollar Flounders as Chances of Fed Rate Hike Remain Uncertain
The ‘Buck’ has remained an unstable currency on the global markets today, with losses comprising of -0.5% against the New Zealand Dollar (USD/NZD) and the South African Rand (USD/ZAR) along with a narrow trending against the Euro (USD/EUR).
The latest domestic data has disappointed investors, with industrial and manufacturing production in May falling on the year in both cases.
Also alarming investors has been theory from BNP Paribas Chief US Economist Mortimer Lee that a drop in corporate sector profits may be indicative of an incoming recession.
Future EUR, USD Forecast: Fed’s Interest Rate Decision Incoming, Freeze Expected
The next economic announcement for the pairing will also be the biggest of the week for the US – the soon-to-be-announced Federal Open Market Committee (FOMC) interest rate decision for June.
With chances of a rate hike currently placed at 2%, it seems improbable that any sort of movement will go ahead, especially with the possibility of a ‘Brexit’ on the horizon.
Recent EUR, USD Exchange Rates
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1216 and the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8918 recently.