- EUR USD Weakened by Greek Debt Fears – Investors speculate that Greece could be left to tumble out of Eurozone.
- US Dollar Strengthen By Data – Jobless claims drop to near 43-year low.
- EUR USD Forecast – Predicted drop in consumer confidence likely to dampen demand for ‘Greenback’
The EUR USD exchange rate continued to suffer on Thursday over worries that an ‘unsustainable’ level of debt could prompt Greece to leave the European Union
‘Grexit’ Fears Weigh on Euro Sentiment
The Euro struggled to make any significant advances against the US Dollar today as ongoing concerns over the stability of the Eurozone have been compounded by the situation in Greece.
Greece’s astronomical levels of debt have been in the spotlight this week following a statement from the International Monetary Fund (IMF) in which it called upon Greece’s European Partners to do more to help relieve its debt.
However members of the Eurozone are reluctant to commit any more funds to Greece as public opinion has soured in recent years, with Greece’s economy being seen as a bottomless pit and a waste of taxpayers’ money.
This is especially true in Germany, one of Greece’s largest creditors as the government faces a general election later this year. Growing impatience over the situation even prompted Wolfgang Schaeuble, Germany’s Finance Minister to suggest that Greece should leave the Eurozone should it want a debt cut.
Meanwhile the European Stability Mechanism (ESM) disputed the claims, saying;
‘A sober look at the facts shows that Greece’s debt situation does not have to be cause for alarm. The solution for Greece lies not in additional debt relief, but in the government implementing reforms so as to avoid delays in the issuing of the next tranche of the ESM loan.’
However with Prime Minister Alexis Tsipras still resisting the proposed reforms, claiming that further austerity would only hurt the people of Greece even more, it doesn’t look like he will come to agreement with the ESM over the release of a third bailout anytime soon.
US Dollar (USD) Strengthened by Drop in Jobless Claims
The US Dollar was also bolstered yesterday afternoon by a surprise drop in Jobless Claims this month as they fell from 246k to 234k in February, nearly reaching a 43-year low, despite a slight uptick in the unemployment rate last month.
The news will be a relief to Donald Trump who placed jobs at the centre of his election campaign, despite his short time in office being unlikely to have had much of an impact on the jobless rate, the upbeat data will help to deflect attention away from his non-existent economic policies.
However it is likely to only be a temporary fix for the ‘Greenback’ with Trump’s unpredictability likely to cause investors to shy away again by the end of the week.
EUR USD Exchange Rate Forecast: US Consumer Confidence Ahead
The EUR USD exchange rate may mount a recovery later this afternoon as the University of Michigan releases its latest confidence survey, with economists predicting that concerns over the new US administration will cause consumer sentiment to sink from 98.5 to 97.9 in February.
Meanwhile the Euro may also struggle this morning as analysts predict that both France and Italy’s latest industrial production figure will disappoint investors, falling from 2.2% to -0.7% and 0.7% to 0.1% respectively.
Current Interbank Exchange Rates
At the time of writing the EUR USD exchange rate was trending around 1.06 and the USD EUR exchange rate was trending around 0.93.