- Euro fluctuated this week as FED eyes interest hike – USD Supported by Yellen’s rate hike comments
- American consumer confidence dips 2.1 points – Below- forecast data sees Dollar weaken slightly.
- European Central Bank (ECB) rates announcement today –Euro boosted with ECB expected to hold rates steady.
- Forecast –
The Euro (EUR) to US Dollar (USD) exchange rate is holding steady today after last week’s decline.
As the US Dollar strengthened due to US Federal Reserve Chairwoman Janet Yellen hinting at a possible rate hike taking place in the months ahead, the Euro fell against the Dollar by roughly 100 pips.
This week however, the Euro has seen a slight boost due to an upcoming announcement by the European Central Bank (ECB) with a drop in American consumer confidence also helping the EUR/USD rate.
Euro Regains Strength Ahead of ECB Announcement After Faltering Against US Dollar
Spanish unemployment figures hitting a six year low helped strengthen the Euro this week along with a rise in German retail sales and speculation surrounding the upcoming ECB announcement.
The European Central Bank was expected to, and did, hold fire on a rate rise as economic indicators have supported no action being taken at the present time.
Mario Draghi, President of the ECB called the prospect of a ‘Brexit’ a ‘downside risk’ and made it clear the ECB is interested in the UK staying in the EU.
In the wake of the ECB interest rate announcement the Euro to US Dollar (EUR/USD) exchange rate was left trending in the region of 1.1157, down 0.3% on the day’s opening levels.
Mismatched Data Affords US Dollar Little Support
A cloud of uncertainty continues to hang over the US Federal Reserve’s intentions regarding future rates hike, keeping investors cautious and keen to see how the game will play out.
This has limited US Dollar gains, although USD did advance last week thanks to some growth in the US GDP. Positive manufacturing and personal spending figures are currently keeping the US Dollar at a comfortable rate.
The publication of the Federal Reserve’s latest beige book has also supported USD trading.
According to Deutche Bank US economist Joseph A. LaVorgna; the tone of the Fed’s latest beige book was far more subdued compared to previous iterations. Citing high use of terms like ‘modest’ and ‘moderate’.
EUR/USD Declines Ahead of Influential Retail Sales & Employment Reports
In tomorrow’s Non-Farm Payrolls report US unemployment is set to drop slightly, or so forecasters have surmised. Average earnings are also believed to have held steady in May. Typically this would give the US Dollar some boost over the Euro but increases in the Eurozone’s retail sector may keep the currency pair stable.
US non-manufacturing (services) composite data hints at a slight decrease which could undermine demand for the US Dollar and see the EUR/USD exchange rate advance.
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