Despite the publication of a disappointing US consumer confidence gauge on Friday, the Euro was still trading close to a two-month low against the US Dollar.
Speculation that the Fed will continue tapering stimulus buoyed the ‘Greenback’ against several of its major rivals.
As noted by senior economist Hans Kunnen, ‘More people are leaning toward simply the fact that the Fed will taper, and that’s supporting the US Dollar. The US is committed to tapering, and they will. The recovery is sufficiently robust to allow that to happen.’
Meanwhile the Euro was close to a one-week low against the Pound as the British asset was supported by the news that a gauge of UK house prices climbed in January.
The Rightmove house price report showed a 1.0 per cent month-on-month rise and a year-on-year increase of 6.3 per cent.
The Euro was little changed following the publication of German producer price data.
Producer prices in the Eurozone’s largest economy climbed by 0.1 per cent in December rather than stagnating as expected.
However, the common currency received some support as Moody’s Investors Service restored Ireland’s credit rating to investment grade on Friday.
Ireland’s rating was positively revised from Baa3 to Ba1 with a positive outlook.
The Emerald Isle has become something of a poster child for the Eurozone’s bailout scheme and now that all three major ratings agency have returned the nation to investment grade status its recovery could step up a gear.
According to one Copenhagen based analyst; ‘Ireland has clearly turned a corner and you’re starting to see that reflected in the ratings. We’re going to see a continued grind lower in yields in peripheral countries as investors look for places where they can get yield pick-up and as long as fundamentals are also improving.’
While today is rather quiet in terms of influential data releases, there are plenty of reports scheduled for publication over the next week which will keep currency markets moving.
Tomorrow the Euro could recover losses against the US Dollar as a result of German/Eurozone ZEW economic sentiment surveys.
The German survey is expected to show improvement, advancing from 62.0 to 63.0 in January.
A measure of the current situation in Germany is also forecast to advance from 32.4 to 34.0.
If these results prove accurate we forecast that the Euro to US Dollar exchange rate will rally. Although the ‘Greenback’ will continue to trade higher as a result of Fed speculation, a quiet North American session may help the EUR/USD pairing hold onto gains into Wednesday.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,British Pound,0.8245 ,
Euro,,New Zealand Dollar,1.6435 ,
Euro,,Canadian Dollar,1.4836 ,