The Euro to GBP and Euro to USD exchange rates were little moved on Friday with the US Dollar on course to make its worst weekly loss in six-months as investors look ahead to Mario Draghi’s speech at the Jackson Hole Symposium.
Due to a run of disappointing economic data releases over the past few weeks, the Euro has been under consistent pressure against the majority of its most traded peers.
Against the US Dollar the single currency declined to an 11-month low after a report showed that activity in the Eurozone’s manufacturing sector declined more than expected to a 13 month low.
Inflation across the 18-member currency bloc also fell to a new record low raising pressure upon the European Central Bank to take action to stave off the threat of deflation establishing itself.
As such, some economists are expecting the Central Bank’s policy makers to introduce a quantitative easing programme at its next policy meeting.
Market attention on Friday was focused on the annual summit of the world’s top central bankers taking place at Jackson Hole, Wyoming USA.
For the Euro, in particular investors will be watching a speech due to be given by European Central Bank President Mario Draghi. Economists will be looking to see if Draghi will hint at the introduction of new measures in order to assist growth in the Eurozone.
With unemployment still at 11.5% of the labour force, there is plenty of “slack” in the euro zone. However, there is widespread scepticism about whether a Eurozone quantitative easing would work.
A further depreciation of Europe’s single currency would offer Draghi an alternative escape route.
Economists will also be watching a speech due to be delivered by Federal Reserve Chairman Janet Yellen. If Ms Yellen’s comments are dovish then we can expect to see the US Dollar hand back some of its recent gains.
The majority of investors are expecting Yellen to backtrack slightly and say that the US economy remains vulnerable.
Recent data however has increased speculation that a US interest rate hike could occur sooner than forecast.
The labour market in the world’s largest economy has continued to strengthen and other economic factors such as manufacturing production have improved.
The minutes of the last Fed policy meeting reveal a sharpening debate at the Central Bank between those who want the central bank to get a move on hiking interest rates and the “core” of the committee including Yellen, who think moving too quickly, would be the biggest mistake the central bank could make.
Depending on what the Central Bank leaders say at Jackson Hole the Euro exchange rate could move in either direction.
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,1.3271 ,
Euro,,British Pound,0.8004 ,
Euro,,Australian Dollar,1.4249 ,
Euro,,Canadian Dollar,1.4535 ,
[/table]
