The US Dollar to Euro (USD/EUR) exchange rate closed last week in a stronger position and managed to hold its gains over the weekend.
With the US having posted better-than-expected US Trade Balance data last week, the ‘Greenback’ (USD) has continued its bullish run against most of the majors. Sentiment wavered slightly after President Barack Obama announced his authorisation of airstrikes in Northern Iraq, but the news has been somewhat quelled by the ongoing geopolitical issues in Russia and Ukraine. Also the ISM Non-Manufacturing Composite posted a positive result, having risen to 58.7 from a forecast 56.5.
Conversely, European data proved less satisfactory. Demand for the Euro faltered following less-than-satisfactory German factory orders data. The single currency was further softened with second quarter contraction in the Italian economy. Also the European Central Bank (ECB) elected to maintain their interest rate at 0.15%.
The week ahead is likely to increase volatility in the USD/EUR pairing with the release of several influential reports.
US Dollar to Euro (USD/EUR) Exchange Rate Forecast
Tuesday sees the release of the US Monthly Budget Statement, and Wednesday will be highly significant with the publication of the nation’s Advanced Retail Sales data. The figure is a significant market mover, valuable both for its timeliness and insight into consumer demand and consumer confidence. Consumer spending is vital to the US economy, accounting for more than two-thirds of all economic activity. It is currently forecast that retail sales climbed by 0.3% on a month-on-month basis, a slight increase from the previous printing of 0.2%.
Thursday’s Initial Jobless Claims and Continuing Claims reports may also be of interest to those backing the US Dollar.
Friday sees a plethora of US data releases. Industrial Production is forecast to rise from 0.2% to 0.3%. Though industrial production only accounts for a relatively small portion of GDP, it is considered highly sensitive to changes in interest rate and consumer demand. Manufacturing (SIC) Production may also be of interest although there is no forecast figure as yet.
Perhaps the Friday data release holding the most weight economically is the University of Michigan Confidence report. This is because the University of Michigan Confidence survey is considered one of the foremost indicators of US consumer sentiment.
There are also several influential data releases next week which may impact the Euro.
Tuesday will see the publication of the German ZEW Survey for Economic Sentiment and the Eurozone ZEW Survey for Economic Sentiment. Neither have a forecast figure as yet.
Wednesday’s important Euro data releases are the year-on-year German Consumer Price Index and the year-on-year Eurozone industrial production report. Tracking industrial production is very important for forecasting Gross Domestic Product (GDP) changes.
Thursday will also produce data including the German Gross Domestic Product and Eurozone Gross Domestic Product reports.
We forecast that disappointing growth figures for the Eurozone as a whole and its largest economy could see the US Dollar to Euro (USD/EUR) exchange rate climb this week.
UPDATED 10:35 GMT 11 August, 2014
US Dollar to Euro Exchange Rate News Restricted
The US Dollar to Euro (USD/EUR) exchange rate strengthened slightly on Monday, achieving 0.7471.
The general risk-off market pushed investors towards the US Dollar while the Euro came under pressure ahead of tomorrow’s ZEW confidence reports for the Eurozone and its largest economy.
With economic reports for both the US and Eurozone lacking today, further movement in the USD/EUR pairing will be incremental.
The direction taken by the US Dollar to Euro exchange rate over the course of this week is likely to be dictated by the US Advance Retail Sales report, out on Wednesday.
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