The Euro to US Dollar (EUR/USD) exchange rate was firmer on Tuesday despite the release of data which showed that unemployment remains stubbornly high across the Eurozone and manufacturing activity in Germany eased.
The US Dollar (USD) meanwhile was under pressure from yesterday’s dovish comments by Federal Reserve Chairman Janet Yellen who said that ‘considerable slack’ remains in the US labour market and suggested that the Central Banks quantitative easing programme will still be needed.
Mixed data for the US manufacturing sector had relatively little impact upon the currency as both the Markit PMI and ISM index both showed that the sector was expanding, albeit at a slower pace than in the previous month.
Production and the overall US economy is expected to pick up over the coming weeks as the harsh winter weather eases. If data continues to be weak then we can expect the ‘Greenback’ to soften markedly as expectations will rise that the Fed will choose to delay tapering its QE programme.
“The profits are piling up, orders are expanding, and confidence is improving. I think we will suddenly show some renewed vigour as we get away from the winter freeze,” said the senior US economist at Deutsche Bank Securities Inc.
Against the Pound the Euro remained higher as the UK currency continued to be weighed upon by the sessions disappointing PMI data.
On Wednesday the single currency could make further gains due to a lack of domestic UK data releases. Tomorrow sees the publication of the latest Eurozone GDP and PPI data. The US Dollar could recover some ground if factory orders data comes in strongly.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3797 ,
Euro,,British Pound,0.8290 ,
Euro,,Australian Dollar,1.4944 ,
Euro,,Canadian Dollar,1.5248 ,