In light of recent comments issued by Federal Reserve officials, hopes that the tapering of US stimulus will begin before the end of the year have been virtually extinguished and the US Dollar has come under pressure.
As currency strategist Emma Lawson noted; ‘The US Dollar has been under pressure right across the board. Certainly, the doves are taking the fore at the moment. Most investors have moved away from any expectation of tapering in December.’
Similarly, London-based industry expert Lee Hardman was quoted as saying; ‘Comments from Dudley [New York Fed President] suggest the Fed is unlikely to begin tapering in December and that’s taken some of the bid away from the Dollar. We stick to the view that the first taper will come in March.’
Consequently the US Dollar began European trading softer against several of its most traded peers, including the Euro.
That being said, the EUR/USD pairing fluctuated following the publication of the day’s most prominent economic reports.
The Euro is currently trading against the US Dollar in the region of 1.3507
The Euro was supported by the news that economic sentiment in Germany, the Eurozone’s largest economy, rose in November, hitting a four-year high of 54.6.
Economic sentiment in the Eurozone also strengthened, rising to 60.2 from 59.1.
However, Euro gains were limited as a separate confidence measure of the current situation in Germany unexpectedly dipped and the Organisation for Economic Cooperation and Development slashed its global growth forecasts.
The OECD’s decision to cut its worldwide growth forecast for the year from a previously estimated 3.1 per cent to 2.7 per cent saw investors turn to lower-risk assets, although the news that the Eurozone is expected to contract by less-than-anticipated in 2013 tempered common currency losses.
Meanwhile the US employment cost index for the third quarter came in at 0.4 per cent rather than the 0.5 per cent expected.
Tomorrow EUR/USD volatility is most likely to occur in response to advance retail sales figures for the US.
It is expected that the report will show an increase in sales of 0.1 per cent in October, which would wipe out September’s 0.1 per cent decline.
While a better-than-forecast result could boost the ‘Greenback’ it would take a truly outstanding result to alter most industry expert’s opinions of tapering.
German producer price data will also be of interest.
Euro (EUR) Exchange Rates
As of 14:30 GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3507 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8386 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4346 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6194 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4095 >