Implication of Imminent Federal Open Market Committee (FOMC) Rate Hike Rallies US Dollar as EUR/USD Exchange Rate Slips
The ‘Greenback’ (USD) saw a resurgence yesterday after comments from the US Federal Reserve Bank of Atlanta president Dennis Lockhart strongly suggested that the Federal Open Market Committee (FOMC) could opt for an interest rate rise in September. Buoying the value of the US Dollar across the board, this saw the EUR/USD exchange rate pulled down from the high trends of the day to plunge to 1.0856 in the early hours. Ahead of today’s round of PMIs the pairing is moving in the range of 1.0863.
As Greek stock turmoil fails to particularly impact the Euro (EUR), the US Dollar is beginning to struggle somewhat with the US Manufacturing PMI revealing a slowing in economic growth.
Yesterday’s Manufacturing Figures Prompted Much Movement in the EUR/USD Exchange Rate as the ‘Greenback’ Continues Softening
Manufacturing PMIs were released for both the Eurozone and the US yesterday, which naturally prompted a lot of movement for the EUR/USD exchange rate. In spite of particularly negative figures from Greece, the relative economic strength of member nations such as the Netherlands, Spain and Italy held up the overall figure to keep the Eurozone as a whole in a positive state of growth. The US, on the other hand, produced a shortfall to clock in at 52.7 rather than the forecast 53.5. Slowing growth is likely to influence the Federal Open Market Committee (FOMC) decision on interest rates in the coming months and pundits appear concerned that this result could push the highly anticipated rate hike back into the final quarter of 2015 or perhaps later.
The US Personal Consumption Expenditure index, however, did display some positivity for the ‘Greenback’ (USD) as it met expectations to rise modestly on the previous figure of 1.2% to reach 1.3%. Suggesting that inflation is continuing to increase steadily in the US, this could have signalled an improved chance of an imminent Fed interest rate hike had it not been for the superseding bad performance of the Manufacturing PMI.
Upcoming US Factory Orders Could Push US Dollar (USD) Lower in the Event of Further Disappointment, Euro (EUR) Remains Steady Pending Data
The coming day is likely to remain a relatively slow one for both the common currency (EUR) and US Dollar though, with limited data releases due from either the US or Eurozone. However, this afternoon’s Factory Orders for June from the States could trigger some increased movement. Gauging the economic conditions of the domestic manufacturing sector, this could provide further indications as to the potential for a FOMC rate rise in the near future. Another poor performance here, however, will no doubt lend strength to the Euro ahead of tomorrow’s Eurozone Retail Sales numbers.
Following a slight downturn overnight, having slumped to 1.0934 during the American trading session, the EUR/USD exchange rate today returned to trending upwards as the safe-haven currency continued to lose the confidence of investors.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Raft of US Figures Ready to Spur Possible Rally in Later Week
The latter half of the week stands to be much more active for the EUR/USD pairing with several major reports from the US holding the potential for a ‘Buck’ rally. The Non-Manufacturing PMI, employment data, and Balance of Trade could all provide a return to bullish form for the US Dollar in the coming days. Further weakness, however, will certainly not go unexploited by rivals.
Strong Retail Sales for the Eurozone could well provide the Euro with the boost it needs to take advantage of the currently floundering ‘Greenback’. As Greek concerns remain on the minds of investors, particularly as bailout talks seem increasingly unlikely to conclude in time to meet the deadline for the European Central Bank (ECB) repayment on 20th August, the common currency could nevertheless be in line for further declines.
Current EUR, USD Exchange Rates
At time of writing the EUR/USD pairing is at 1.0978, with the USD/EUR exchange rate trending down in the region of 0.9107.