Yesterday the Euro softened against a bullish Pound and fluctuated against the US Dollar as the Eurozone’s trade surplus narrowed by more than expected and inflation remained considerably below the European Central Bank’s close-to-2 per cent target.
The common currency retained declines against Sterling as the European session opened, but consolidated its overnight advance on the ‘Greenback’.
The EUR/USD pairing jumped overnight as some higher-risk assets were boosted by the last-minute agreement forged among American lawmakers.
It came right down to the wire, but after weeks of indecision US policymakers reached a compromise regarding raising the nation’s debt ceiling.
Although the deal (which was short-term and will expire early next year) disappointed some factions, it did avert a potentially cataclysmic default and bring an end to the 16-day Federal shutdown.
Following a Senate vote President Obama stated; ‘We’ll begin reopening our government immediately and we can begin to lift this cloud of uncertainty and unease from our businesses and from the American people’.
The Euro/US Dollar pairing is currently trading in the region of 1.3561
However, while some higher-risk currencies strengthened against the US Dollar in response to the development the Euro did dip against the Yen as the continued political uncertainty boosted the Asian asset. After all, although this solution might calm markets for the next couple of months the New Year will bring a whole new set of worries.
Furthermore, during the shutdown several highly influential economic reports for the US (including non-farm payrolls) couldn’t be published. As they are released in the coming days speculation regarding the Federal Reserve tapering stimulus will return to the fore and the EUR/USD pairing is likely to experience notable movement.
UK retail sales figures, due for publication at 9:30 GMT could cause fluctuations in the EUR/GBP pairing, although investors will also be looking to Eurozone current account and construction output figures for direction.
With several US officials scheduled to speak today, general market volatility can be expected in the hours ahead.
Euro (EUR) Exchange Rates
As of 09:00
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3561 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8481 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4231 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6102 >
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4015 >