- EUR USD Bolstered by Recent US Polls – Investors dovish as Trump victory looks possible.
- German Unemployment Figures Beat Forecasts – Euro strengthened by impressive data.
- Fed Rate Decision – Federal Reserve unlikely to raise rates today.
The EUR USD exchange rate surged by around a cent over the last 24 hours as investors became increasingly dovish towards the US Dollar (USD) amidst growing political uncertainty ahead of the US elections.
US Dollar (USD) Nosedives as Trump Catches up in Polls
US Dollar (USD) exchange rates continue plummeting today as certain polls in the US show that Democratic presidential candidate Hillary Clinton is now only a couple points ahead of her Republican rival Donald Trump.
Clinton had enjoyed a substantial lead in Polls in October after Trump’s campaign was marred by numerous scandals. However that lead has been significantly narrowed in recent days by the news that the FBI would be launching a new inquiry, looking into Clinton’s use of a private email server while serving as US Secretary of State.
With less than a week before America votes for it next president, the US election has once again become a two horse race, with Nicholas Colas, chief market strategist at Convergex, saying;
‘Markets are now going to have to recalibrate for a coin toss outcome versus what they thought was a sure thing. That will happen headline by headline and tick by tick until the election.’
Investors fearing the possibility of a Trump presidency and what impact the politically inexperienced businessman may have on the US economy is likely to weigh on US Dollar exchange rates over the next few days.
As the most traded currency pairing in the world, the EUR USD exchange rate has benefited greatly from the weakening ‘Greenback’ as dovish investors flock to the Euro (EUR).
Euro (EUR) US Dollar (USD) Exchange Rate Advances on Impressive German Employment Data
Euro (EUR) exchange rates have also been strengthened by some better-than-expected German jobs. The report showed that unemployment fell to 6.0% in October, beating forecasts that it would remain at 6.1%.
Other European ecostats showed that the French manufacturing PMI rose to 51.8 in October, up from predictions that it would hold at 51.3. This contributed to a rise in the overall Eurozone manufacturing PMI from 53.3 to 53.5.
The growth in the European economy should help ease some of the recent pressure on the Euro, which has suffered following reports that the European Central Bank (ECB) may be seeking to extend its quantitative easing programme past March 2017 in order to ensure that the Eurozone meets its inflation targets.
EUR USD Exchange Rate Forecast: Fed Unlikely to Raise Rates Today
While one of the biggest events on the week’s calendar, today’s Federal Reserve rate meeting is likely to prove uneventful for the Euro to US Dollar exchange rate. The Fed is wildly predicted to vote to leave interest rates unchanged ahead of the US election, with investors already pricing out the chances of a rate hike as they bet on it happening in December. An unexpected rise could see the markets go wild however, causing traders to flock to the ‘Greenback’.
Meanwhile the US Dollar may be able to rally later today following the release of the US ADP employment report, which is predicted to show an increase in positions from 154k to 165k in October, although an unexpected drop in figures could see USD retreat even further.
Current Interbank Exchange Rates
At the time of writing the EUR/USD exchange rate was trending around 1.10 and the USD/EUR exchange rate was trending around 0.90.
