- Euro US Dollar 2016 Exchange Rate Near Week’s Opening Levels – Boosted by ECB bulletin
- US Dollar Sold in Corrective Trade – Some analysts perceive USD rally as overdone
- EUR Forecast: Quieter Euro Trade Expected Friday – Ecostats may not influence EUR movement
- USD Forecast: Underlying Factors Remain Strong – USD investors hopeful for bullish 2017
Euro US Dollar 2016 Exchange Rate Flatter on Friday
After falling from its Thursday highs, the Euro US Dollar 2016 exchange rate fluctuates throughout Friday’s session and was generally not influenced by the day’s ecostats.
The US Dollar was bolstered slightly towards the end of the week due to an increase in demand for ‘safe haven’ currencies.
(Published 07:00 GMT 23/12/2016)
The Euro US Dollar 2016 exchange rate continued to advance on Thursday and could advance into the end of the week if markets remain soft on the US Dollar. Thursday’s US data did little to bolster demand for the ‘Greenback’.
EUR USD began the week trending in the region of 1.04 and despite falling to a 2016-low of 1.03 on Tuesday the pair had recovered to the week’s opening levels by Thursday afternoon.
Euro (EUR) Bolstered by ECB’s 1% Inflation Forecast
Upside movement in the Euro has improved notably in the last week. The primary factors for this shift in direction have been a broadly weaker US Dollar, as well as relatively hawkish Eurozone ecostats and forecasts.
The Euro was able to continue its winning streak modestly on Thursday following the publication of the European Central Bank’s (ECB) final 2016 economic bulletin.
While the report was generally in line with the bank’s 8th of December policy meeting, some traders were cheered by the bank’s forecast that Eurozone inflation was to rise to above 1% in the New Year.
According to the report;
‘Looking ahead, on the basis of current oil futures prices, headline inflation rates are likely to pick up significantly further at the turn of the year, to rates above 1%, mainly owing to base effects in the annual rate of change of energy prices. Supported by the ECB’s monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack, inflation rates should increase further in 2018 and 2019.’
While this is in line with the ECB’s previous forecasts, continued confidence that Eurozone inflation would rise above 1% for the first time since 2013 offered the Euro modest support on Thursday.
US Dollar (USD) Fails to Benefit from Higher-Than-Expected US Q3 Growth
Since the middle of the week, the US Dollar has been sold from the highs it reached on its Federal Reserve 2017 outlook rally.
Some analysts had pointed out that the ‘Greenback’ may be overvalued, with investors not taking into account the considerable number of downside uncertainties in 2017.
Because of this, USD has fallen on corrective trade and profit-taking stances since Tuesday.
On Thursday the US Dollar was granted a little more support in the form of the US Q3 annualised Gross Domestic Product (GDP) results, which improved to an impressive 3.5% rather than from 3.2% to 3.3% as forecast.
November’s durable goods orders figures were mixed. While the result only contracted at -4.6% rather than the predicted -4.7%, the October print was revised lower from 4.8% to 4.6%.
However, as the day’s US personal income, personal spending and personal consumption results came in the US Dollar began to fall once again.
Personal consumption expenditure core slipped to 1.6% year-on-year in November, with the month-on-month figure coming in at a stagnant 0.0%. Personal income also printed at 0.0%, missing forecasts of 0.3%.
Euro US Dollar 2016 Exchange Rate Movement Forecast to Slow on Friday
The Euro US Dollar 2016 exchange rate is unlikely to see a significant change in trajectory on Friday as global markets will be increasingly quiet just ahead of the long holiday weekend.
The day’s Eurozone ecostats include France’s final Q3 Gross Domestic Product (GDP) results which are expected to meet preliminary figures of 0.2% quarter-on-quarter and 1.1% year-on-year.
Over in the US, November’s new home sales results will be published as well as the University of Michigan’s final December confidence figures.
None of these stats are expected to cause significant changes in EUR USD and the exchange rate will instead continue to trend based on underlying factors such as 2017 outlooks.
Despite being sold from its highs in recent days, investors remain optimistic on the US economic outlook for 2017 so underlying factors in the US Dollar remain on the upside.
The Euro doesn’t have the strong upside factors the ‘Greenback’ has, but the shared currency is still likely to continue its recovery attempts in the coming trade days as it’s bought up from its lows and as investors hope for Greek debt relief talks to return to normalcy after recent tensions.
As a result, the Euro US Dollar 2016 exchange rate could end the week relatively close to its opening levels and continue its modest recovery efforts next week as 2016 draws to an end.