Last week the Euro ended trading slightly softer against the US Dollar as investors looked ahead to this week’s Federal Open Market Committee policy meeting and speculated on the likelihood of the Fed tapering stimulus this month.
According to the latest Bloomberg survey, the odds of the Federal Reserve trimming the level of asset purchases from 85 billion Dollars has increased by 17 per cent over the past four-weeks as surprisingly strong US employment figures pointed towards an improving domestic recovery.
However, in spite of a poor industrial production report for the 17-nation currency bloc Euro losses have been somewhat limited as last week’s encouraging Italian growth data and the news that Ireland is ready to exit its bailout programme lent the common currency support.
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3756
But while there have been signs of the Eurozone’s economy recovery stumbling along in the fourth quarter, industry experts are still warning of the risks facing the region in the New Year.
In a recent report for The New York Times, Reuters editor Hugo Dixon commented; The latest news from the euro zone’s battlefronts is fairly encouraging. All the problem countries, with the exception of tiny Cyprus, are expected to grow next year. Budget deficits, one symptom of the crisis, are being cut. Current account deficits, the other main symptom, are coming into balance. [But] None of this is to suggest that the euro zone is in good shape. Unemployment is over 12 percent — and in Spain and Greece it is more than double that. Even the European Commission expects the euro zone to grow only 1.1 percent in 2014. The long grind carries with it the risk of political explosions. The main flashpoint next year could be the European Parliament elections in May, in which traditional center-left and center-right parties are expected to perform poorly as voters switch to protest groups.’
Any negative news emerging from the Eurozone is likely renew fears that the European Central Bank will be forced to instate a negative deposit rate in order to shore up the economy, so the Euro could come under pressure in the weeks ahead.
In the next few hours extensive Euro movement could occur in response to several pieces of influential Eurozone data, including German and Eurozone manufacturing/services PMI.
Eurozone trade balance data will also be of interest, although US preliminary Markit PMI and industrial production reports could drive EUR/USD fluctuations.
Euro (EUR) Exchange Rates
As of 07:05 am GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3756 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8437 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.5365 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6618 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4550 >