The Euro US Dollar (EUR USD) exchange rate slipped this morning as market jitters over the recent political chaos in the US finally began to recede.
The recent political storm that has engulfed the Trump administration started to clear over the weekend as the President made his first foreign trip, visiting allies in the Middle East.
The trip proved to be fairly uneventful by Trump’s standard’s with the usually outspoken president able to rein in his rhetoric, limiting it largely to criticism towards Iran which he blames for aiding the so-called Islamic State.
The US Dollar’s recent weakness was first prompted by Trump’s firing of FBI director James Comey, who was leading an investigation into alleged links between the president’s election campaign and the Russian State.
These political jitters intensified last week as it emerged that Trump had asked the former FBI director to halt his investigation into his former national security chief Michael Flynn’ ties to Russia, with the following fallout engulfing the administration and prompting concerns that the political storm could delay Trump’s proposed tax reforms and infrastructure spending.
However despite the political situation beginning to settle, with an FBI investigation still ongoing and Trump seemly always one step away from another controversy it is unlikely that the downtrend in EUR USD will last for long.
Meanwhile the Euro has failed to advance this morning ahead of a meeting of Greece’s creditors to discuss the potential release of the next round of funding in the nation’s bailout.
Eurozone Finance Ministers will meet in Brussels this afternoon in an attempt to come to an agreement over the next tranche of funding that will prevent Greece from defaulting on a €7bn debt repayment due in July.
This comes after the Greek government voted to implement further austerity measures last week, which its creditors had imposed as a requirement for further funding, however any talks of debt relief for Greece could hold up talks as Eurozone Ministers and the International Monetary Fund (IMF) continue to argue over the nation’s economic growth, with Greece’s latest GDP figures showing that the country fell into a recession once again at the start of 2017.
Looking ahead the EUR USD exchange rate could tumble further on Tuesday as economists predict that Germany’s Manufacturing PMI will has slipped from 58.2 to 58 in May, although a slight uptick in the Eurozone Services PMI could help to offset this as analysts expect it to rise from 56.4 to 56.5 over the same period.
Meanwhile movement in the US Dollar this afternoon is likely to be dependent on the tone struck by Federal Reserve members in a number of speeches later today.
Should they echo the dovish tone of a speech by St. Louis Fed President James Bullard last Friday then the ‘Greenback’ is likely to fall, as he said that the current expectation for rate hikes this year was too aggressive and that he would only support one additional hike in 2017.
Current Interbank Exchange Rates
At the time of writing the EUR USD exchange rate was trending around 1.1212 and the USD EUR exchange rate was trending around 0.8917.
