The Euro (EUR) exchange rate managed to regain some lost ground against both the Pound (EUR/GBP) and US Dollar (EUR/USD) on Friday but those gains are forecast to be short-lived as investors take positions ahead of the release of eagerly awaited employment data out of the USA.
Sterling softened against the Euro, US Dollar and other major peers following the release of data, which showed that the UK’s trade deficit increased in September. According to the report released by the Office for National Statistics, the UK’s trade deficit rose from £1.8 billion to £2.8 billion as demand for goods from Europe and global markets fell.
The data dents hopes by the UK government to rebalance the economy by focusing on exports.
‘You get one good month, one bad month, and one good month and so on. There has been no change in the trend. Net trade has contributed very little to growth of late and there is little sign of that changing any time soon, there has been no change in the trend – net trade has contributed very little to growth of late and there is little sign of that changing any time soon. It is the lack of domestic demand in the Eurozone.
‘That means we struggle to increase our exports as much as our imports. This is probably because continental European consumers and businesses are demanding less of everything and there is not an awful lot that we can do about that apart from watch and wait for the Eurozone recovery to gain traction – or try to export more to elsewhere on the globe,” said Alan Clarke, an economist at Scotiabank.
German Recession Fears Ease
The Euro found support from data out of Germany, which showed that exports and industrial output rebounded strongly in September, easing concerns that the Eurozone’s largest economy is sliding towards recession.
The trade report showed that exports soared by 5.5% to rally from the -5.8% decline recorded in August, which was the biggest decline, recorded in more than five years.
There is no reason to be disappointed here. If you take exports and industrial production together, we will see a small amount of GDP growth in the third quarter, but it may only be enough for 0.1 percent of growth. This temporary slowdown will persist into the fourth quarter. But we won’t see a deep recession,” said Andreas Rees of Unicredit.
Separately, German industrial production increased by 1.4% month on month, an improvement from the preceding months figure of -4.0%. Economists had been expecting a decline of -3.1%.
Euro to US Dollar Exchange Rate Forecast to fall
The Euro is likely to hold onto its gains against the Pound but against the US Dollar, it is likely to fall further and perhaps slip back beyond the two-year low seen earlier in the week.
The strong rise of the ‘Greenback’ is likely to continue unabated as economists increased their bets that the recovery in the US jobs market is gaining in strength.
The diverging trend of the US economy with its major rivals looks set to keep the US Dollar climbing.
Euro Exchange Rate Continues to Gain Against Pound and US Dollar on Monday
The Euro continued to firm against the Pound and US Dollar on Monday as investors shrugged more disappointing economic data from Italy and Greece and instead focused on a sentiment report. The sentiment index compiled by Sentix research group showed that morale among investors in the Eurozone rose to -11.9 in November from -13.7 in the previous month, bettering the consensus forecasts for a reading of -13.5. The gains are likely to be short lived as concerns over the faltering Eurozone economy are set to return later in the week and send the Euro lower once again.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2483 ,
Euro,,British Pound,0.7851 ,
Euro,,Australian Dollar,1.4406,
Euro,,Canadian Dollar,1.4118 ,
[/table]
