After German industrial production softened beyond forecasts, the Euro depreciated against nearly all of its most traded currency rivals. The disappointing data is a further indication of the necessity of the European Central Bank (ECB) introducing additional stimulus.
Aster the US Dollar softened on Friday following a Federal Reserve official talking down the prospect of a 2015 rate hike, the ‘Greenback’ (USD) extended losses after labour data failed to impress.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1830.
Euro (EUR) Exchange Rate Trending Lower on ECB Bets
Data out of Germany produced disappointing results on Friday, causing the shared currency to extend its bearish run. Balance of Trade dropped from €22.1 billion to €17.9 billion in November, with the Current Account surplus narrowing from €22.5 billion to €18.6 billion.
However, the declination in industrial production in the currency bloc as a whole is particularly significant in terms of adding to the pressure mounting on the ECB to begin a period of aggressive stimulus measures. Industrial Production declined from 1.2% to -0.5% on a yearly basis, with November’s monthly print softening from 0.6% to -0.1%.
‘Industrial production has passed the trough’ and ‘should have embarked on a moderate upward trend,’ the Economy Ministry said in the statement.
The Euro to US Dollar (EUR/USD) exchange rate has dropped to a low today of 1.1761.
US Dollar (USD) Exchange Rate GraduallySoftens on Labour Data
Despitef better-than-expected US labour market data, the ‘Greenback’ endured further declination with payrolls well below the level enjoyed at the close of 2014.
Change in Non-Farm Payrolls was forecast to show jobs growth of 240,000 – less than the increase of 353,000 positions recorded in November. The economy actually recorded a jobs gain of 252,000. It is fair to say, however, that this is still a significant declination. Unemployment Rate eclipsed the median market forecast of a drop from 5.8% to 5.7%, with the actual result falling to 5.6%.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Soften
Although the US domestic data wasn’t world-beating, the fact that there is such a clear policy divergence between the Fed and the ECB is likely to see the Euro to US Dollar (EUR/USD) exchange rate decline in the medium term.
The Euro to US Dollar (EUR/USD) exchange rate advanced to a high today of 1.1832.