The Euro to US Dollar (EUR/USD) weakened for the first time in three days on Wednesday as concerns over Greece overrode positive Eurozone data.
The EUR/USD exchange rate hit a session low of 1.140
‘The market is still focusing on the whole Greek story, and trying to assess how the negotiation will happen,’ said the senior economist from Nomura Securities International.
Greece’s new Finance Minister Yanis Varoufakis met with European Central Bank President Mario Draghi. Varoufakis is touring the European Union to try to win support for his plans to negotiate the nation’s massive bailout. The meeting was not successful as reports suggested that the ECB was unwilling to back the minister’s plans to renegotiate the terms of it huge bailout.
The single currency had rallied in the previous session after Athens proposed debt swaps to ease the country’s burden debt, under which creditors would swap outstanding debt for new growth-linked bonds. This could help to reduce the risk of losses on privately held bonds.
Today, the Euro fell from a near two-week against the US Dollar even as purchasing manager indexes from the currency blocs major economies came in positively.
The Eurozone composite purchasing managers’ index, which measures activity in the region’s manufacturing and services sectors rose to 52.6 up from a preliminary estimate of 52.2 and a final reading of 51.4 in December.
US Data mixed
Data out of the United States was mixed as the eagerly anticipated ADP Employment change report for January came in below expectations and as final PMI’s came in better than forecast.
The ADP report showed that US companies created 213,000 jobs, down from the preceding month’s number of 253,000 and below forecasts for a number of 223,000. Despite missing expectations, the data shows that the US economy has created more than 200,000 new jobs for a fifth consecutive month.
Also supporting the Greenback was the latest ISM Non-Manufacturing Index which came in at 56.7.
Euro Forecast to Weaken
‘The next 24 to 36 hours are going to be more challenging for Greece. Even though we have seen some improvements in some of the data points, including those PMIs, the question is if that is enough to justify further strengthening in the Euro.
We are seeing some risk uncertainty coming back into the market,’ said Jeremy Stretch, head of foreign exchange at Canadian Imperial Bank of Commerce.
Euro Exchange Rate News:
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