- EUR/USD Exchange Rate Equalises after Troubling Weeks for the Dollar – USD regains its footing after devastating jobs data.
- ECB’s Quantitative Easing has Desired Effect – Euro devalued as European Central Bank ramps up corporate bond buying scheme.
- Dollar Gains Ground – Bearish market sentiment and a drop in US oil supply afford the ‘Buck’ some relief.
- Forecast: US Federal Reserve set to Announce Rate Decision – With the slight possibility of a June rate hike still apparent, all eyes are on the Fed for future market trends.
Euro US Dollar Exchange Rate Static Before FOMC Announcement
After sliding earlier in the week the Euro US Dollar exchange rate was able to steady on Wednesday.
However, if the Federal Open Market Committee (FOMC) adopts a hawkish tone in today’s policy statement, and hints that interest rates could be adjusted in July, we may see the Euro slide against the ‘Greenback’ before the close of the North American session.
(Previously updated 14:35 14/06/2016)
Euro Extends Declines Vs US Dollar Today
Although the Eurozone’s Industrial Production report for April exceeded forecasts on both the month and the year, the Euro extended losses against the US Dollar as the European session continued.
With risk-off trading boosting the US Dollar and sliding European stocks weighing on the Euro, EUR/USD hit a low of 1.1210.
US advance retail sales also printed more strongly than expected, showing sales growth of 0.5% in May. A reading of 0.3% had been expected. While this is unlikely to have an impact on the Federal Reserve’s plans for interest rates, the data still lent the US Dollar support.
(Previously updated 08:30 14/06/2016)
EUR/USD Exchange Rate Trending Lower before Eurozone Industrial Production
The Euro to US Dollar (EUR/USD) exchange rate dropped -0.3% ahead of the publication of the Eurozone’s Industrial Production report.
If output is shown to have increased on the month and year as anticipated the Euro may recover losses against the ‘Greenback’ as trading continues.
Monthly production output of 0.8% and annual output of 1.4% has been forecast.
The EUR/USD exchange rate was trending in the region of 1.1253.
(Previously updated 17:00 13/06/2016)
The Euro has seen a small increase against the Dollar as markets opened this morning.
After a dismal period for the US Dollar following a highly disappointing Non-Farm Payments (NFP) report, the ‘Buck’ saw itself gain some balance within the market as consumer confidence remained high after suffering a marginal decrease ahead of the Federal Reserve’s upcoming policy announcement.
Thanks to the abysmal Non-Farm Payrolls report, which saw only 38,000 new jobs created compared to the 160,000 forecast, the Euro has traded very favourably in recent weeks. However, the European Central Bank’s decision to ramp-up its bond buying quantitive easing scheme saw a decline in the rate on Thursday. Also on Thursday, ECB big wig Mario Draghi gave a short speech with slightly dovish undertones, prompting a small dip in the common currency.
The Euro to US Dollar (EUR/USD) exchange rate fell from last week’s high of 1.1413 to the current figure of 1.1274.
European Stock Tumble Hurts Single Currency amid ‘Brexit’ Fears
The Euro experienced a remarkable rise against the Dollar towards the end of last week, only faltering on Friday after the ECB’s quantitative easing scheme ramped up and Mario Draghi’s speech imparted the usual effect.
Euro sentiment was punctured for the fourth day in a row on Monday as European stocks tumbled with the increasing odds of a ‘Brexit’ vote. While a poll conducted by ORB put the ‘Leave’ camp ahead by a considerable margin, other reports have put the outcome of the vote as too close to call.
This comes after a week of positive reports from the Eurozone. German industrial production saw a 0.8% increase while Eurozone GDP rose by 0.2% compared to the same quarter last year. All this good news was marred, however, by an increasing climate of fear and uncertainly propagated by the UK’s EU referendum.
Recently Gutted US Dollar (USD) Sees Rebound
The US Dollar has seen itself rallying slightly to a more typical rate following the aftermath of the distressing non-farm payrolls report.
The ‘Greenback’ sank across the board after the latest US jobs data fell short and weighed on Federal Reserve interest rate hike expectations. However, bearish market sentiment has seen the US Dollar rally slightly, with a decrease in US oil supply also affording the ‘Buck’ a boost.
Movement in the US Dollar has been related to the US Federal Reserve’s commitment that while a June rate hike might be unlikely given the uncertainty hanging over the EU referendum, rates could still be adjusted in July.
Consumer confidence remains high but dipped slightly from 94.7 to 94.3.
EUR/USD Exchange Rate Forecast: Mixed Forecasts for Week’s Data, USD Future in Fed’s Hands
Lots of influential data is set for release this week, most of it towards the second half.
On Tuesday, Eurozone Industrial production data is forecast to show an increase from 1.2% to 1.4%. If the report comes in as or better than expected, the Euro could be bolstered somewhat.
More Eurozone data comes in the form of a Consumer Price Index release on Thursday. The report forecasts a 0.3% increase in inflation for May on a month-on-month basis, signalling a possible annual rise.
The first report set for release from the US will be the nation’s advanced retail sales figure. The data is predicted to show a monthly increase of 0.3% in May, a significantly slower pace of consumer spending than the 1.3% retail sales growth recorded in April. If the numbers exceed expectations, it could mark an increase in US consumer confidence, a result which could support the American Dollar.
The rest of the week sees the all-important Fed rate hike decision which is expected to see the central bank leave policy unchanged due to the worrying developments in the labour market and the cyclone of uncertainty surrounding the UK’s referendum. Fed economic projections are also set to be released so the market will be looking at that and the wording of the rate decision’s accompanying statement for information.
Overall we can see a risk-off attitude within the markets that is not due to release its grasp until after the UK’s ‘Brexit’ vote at the very least.