EU’s Moscovici Warning over Greek Debt: ‘We Don’t Play Games with the IMF’
Pierre Moscovici, the European Commissioner for Economic Affairs, has stressed the important of securing the participation of the International Monetary Fund as the Greek bailout continues. Greek Prime Minister Alexis Tsipras had previously dismissed help from the IMF, claiming its funds weren’t needed and that its proposals weren’t constructive. However, Moscovici has stated that ‘We don’t play games with the IMF… We are going to try to come to an agreement with the Fund.’
German GDP Hits Forecast Level, Euro (EUR) Bullish
The German economy performed as forecast during 2015, with GDP rising from 1.6% to a non-seasonally-adjusted rate of 1.7%. As a result the Euro is currently on a bullish rise against the US Dollar.
Worse-than-expected Industrial Production figures from the Eurozone haven’t been enough to push the EUR/USD exchange rate into negative territory. Dovish comments from another member of the Federal Reserve could be responsible for the 0.1% gains made by the common currency against the ‘Buck’ (USD).
Euro to US Dollar (EUR/USD) Exchange Rate Positive Despite Production Slowdown
Several pieces of Eurozone data have performed well today, although the headline Industrial Production data disappointed forecasts. After a 2.0% year-on-year (YoY) rise in November, production growth slipped to 1.1%, further than the 1.3% forecast. Industrial Production contracted by -0.7% month-on-month (MoM), more than the -0.3% forecast and representing a drop of -1.5%.
While the French account deficit expanded more than expected from -€1 billion to -€1.4 billion, the 0.3% increase in YoY Inflation was better-than-expected. Greek Harmonised Inflation also performed well, leaping from -0.1% past the anticipated 0.1% level to hit 0.4%. Monthly inflation rose by 0.1% despite predictions it would remain in negative territory after a -0.8% drop in November.
The Euro is experiencing mixed fortunes overall, although predictions from a strategist at Société Générale of another financial crisis have cast a shadow over the common currency. Albert Edwards claims that if the US economy is pushed into another recession by global developments the Eurozone could be a risk of collapse, with the European Central Bank’s (ECB) stimulus measures able to do little to help in the event of a downturn.
The EUR/USD exchange rate is currently trading around 1.0851.
US Dollar to Euro Exchange Rate (USD/EUR) Exchange Rate Softened by Federal Reserve Member Comments
It seems that members of the Federal Reserve are trying to curb expectations regarding the future of US interest rates. The first interest rate hike in almost ten years was widely telegraphed in the months leading up to the decision, but now several members of the Fed have given speeches which suggest the Federal Open Market Committee (FOMC) could take a more cautious approach than investors anticipate.
A few days after Robert Kaplan suggested that four more interest rate hikes, the number officially anticipated by the Federal Reserve, may not be achieved in 2016, Eric Rosengren has warned that US monetary policy should advance cautiously in order to protect against global volatility.
According to Rosengren: ‘While monetary policy should not overreact to short-term temporary fluctuations in financial markets, policy makers should take seriously the potential downside risk to their economic forecasts and manage those risks as we think about the appropriate path.’
His comments come after Dennis Lockhart claimed it was unlikely there would be enough data available to justify another interest rate hike during the first quarter of the year.
The USD/EUR exchange rate is currently trading between 0.9188 and 0.9253.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: German GDP on Tap
Tomorrow sees the release of the 2015 Gross Domestic Product figures for Germany, currently expected to show a non-seasonally-adjusted YoY increase of 1.7%, up from 1.6% previously. US jobs data is also due to be released, but there is little change expected.
The EUR/USD exchange rate is currently trading between 1.0802 and 1.0882.