Euro (EUR) Forges Ahead with Gains on EUR/USD Exchange Rate as Agreement in Greece Offers Renewed Optimism
The agreement of a Greek bailout deal, worth 86 billion Euros, has been signalled this morning, leaving a decent window of time for it to pass through the requisite approval stages prior to the 20th August repayment deadline. Consequently the common currency (EUR) has risen, to push the EUR/USD exchange rate to a fresh weekly peak of 1.1082.
A return to bullish form evades the US Dollar (USD) as the Euro (EUR) is bolstered today on a potential agreement for the third Greek bailout.
Employment Shortfall Saw the ‘Buck’ Weaken with the EUR/USD Exchange Rate Rising Despite Mixed Industrial Production for the Eurozone
Eurozone Industrial Production results on Friday varied from vastly better than expected, such as 4.5% over the 2.53% forecast for Spain, to undoubtedly disappointing, with Germany falling short of the 0.8% forecast to hit 0.6%. In spite of the understandable blow to confidence over the German economy, the Eurozone Composite is likely to be balanced out by the success of other nations, which prevented the common currency losing too much ground in the wake of the data.
By far the bigger impact on the pairing, however, came from the US Unemployment Rate and Non-Farm Payrolls employment data. While the level of unemployment remained static at 5.3% as anticipated, pushing the EUR/USD exchange rate down to an abrupt low of 1.0870, the change in employment came in at only 215 thousand rather than the expected 225 thousand. Indicating a slight slowing in job creation, this was not overwhelmingly good news for the ‘Greenback’ (USD), although the data overall was seen to support the case in favour of a September interest rate adjustment from the Federal Reserve as average earnings increased in line with forecasts.
Progress on Greek Bailout Talks Holds Up the EUR/USD Exchange Rate Ahead of Fed Speech Today
This morning saw the Eurozone Sentix Investor Confidence Index decline on the previous month, slipping to 18.4 rather than rising as expected to 20.3. This demonstration of decidedly lowered faith in the economy of the Eurozone did not have quite such a negative effect on the common currency (EUR) as it might have due to optimistic sentiment in Athens. Greek bailout talks appear to be confidently projected to wrap up before the 20th August European Central Bank (ECB) repayment deadline, meaning that another default for the Hellenic nation may well be off the cards.
Federal Reserve Bank of Atlanta President Dennis Lockhart will be giving a speech this afternoon, which is expected to shed some further light on the direction of the upcoming FOMC Rate Decision. Any hawkish comments could easily prompt the US Dollar to regain some ground against rivals and push the EUR/USD exchange rate away from a weekly high.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: US Mortgage Applications May Prompt Mid-Week ‘Greenback’ Resurgence
A further boost could be possible for the common currency on tomorrow’s ZEW Economic Sentiment Index figures for Germany and the Eurozone. However, an equally poor performance here will only compound the shaken confidence regarding the Eurozone’s usual powerhouse economy. Any upcoming news from Greece is also quite likely to cause movement for the EUR/USD pairing.
Mortgage Applications data for the US will be released later in the week and could give the ‘Buck’ another chance at a rally. An improvement in applications, and consequently the housing market, might be US Dollar-supportive.
Current EUR, USD Exchange Rates
At present the Euro to US Dollar (EUR/USD) exchange rate is trending down in the region of 1.0938, while the US Dollar to Euro (USD/EUR) pairing is at 0.9139.