UPDATE
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.5% on Thursday morning.
Despite the fact that German economic trade data produced disappointing results on Thursday, the shared currency advanced versus its major peers. The appreciation can be linked to news that Greek Prime Minister Alexis Tsipras is confident reforms can be implemented properly. Speculation that the European Central Bank (ECB) has decent scope for expanding quantitative easing also aided demand for the Euro.
The US Dollar, meanwhile, continues to hold a weak position amid speculation that poor global economic conditions will prevent the Federal Reserve hiking the cash rate, irrespective of domestic strength. The publication of minutes from the most recent policy meeting is unlikely to have a huge impact given that the interest rate decision came prior to data which showed the US labour market conditions deteriorated.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1296.
Yesterday…
EUR/USD Commercial Spot Rate Declines after German Industrial Production Contracts
The Euro to US Dollar (EUR/USD) exchange rate edged fractionally lower by around -0.1% on Wednesday afternoon.
Despite a succession of disappointing domestic ecostats, the shared currency avoided a large depreciation of late. This was primarily due to support from a weak US Dollar thanks to EUR/USD negative correlation. However, Wednesday’s German data was the last straw and the common currency dived in response. On the year, German Industrial Production saw just 2.3% growth in August which was well below the median market projection of 3.3%. On the month, August’s German Industrial Production contracted by -1.2% despite predictions of a 0.2% increase.
This, combined with other poor data results seen of late, has compounded speculation that the European Central Bank (ECB) will look to ease monetary policy. Of particular strain on the currency bloc is a complete absence of price pressures, so many analysts expect the Frankfurt-based central bank to expand quantitative easing within the next few policy meetings. The ECB have already relaxed laws which allow Euro-area nations to buy one another’s debt.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1256.
USD/EUR Conversion Rate Predicted to Hold Losses despite Surge in US Mortgage Applications
Over the past few weeks US economic data has produced mostly poor results. Each disappointing ecostat caused a marked US Dollar depreciation as traders expected longer delays to a Federal Reserve rate hike. After data revealed that domestic labour market conditions were not as positive as firth thought, the likelihood of a 2015 rate increase is thinning considerably.
Wednesday’s US economic data printed positively but this wasn’t enough to provoke a ‘Greenback’ rally. MBA Mortgage Applications surged by 25.5% in the week ending October 2nd. This had minimal impact, however, with traders still convinced that the Fed won’t lift-off until 2016 despite assertions to the contrary from policymaker John Williams. An International Monetary Fund (IMF) report that forecast a global economic slowdown didn’t support demand for the Dollar despite predictions that the US will still see robust growth against a backdrop of a global economic struggles. The reason for this is most likely the fact that traders don’t expect the Fed to hike rates whilst emerging market struggle irrespective of domestic strength.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1209 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Steady on Trader Risk Sentiment
Given the lack of influential domestic data to provoke changes, the Euro to US Dollar exchange rate is likely to hold steady for the remainder of Wednesday’s European session. With trader risk sentiment dominating the currency market, the EUR/USD exchange rate is likely to remain steady overnight as well given that both currencies are considered safe-haven assets.
Thursday is likely to see volatility for the world’s most traded currency pairing with both the ECB and the Fed releasing minutes from the most recent policy meetings. US labour market data will also be significant given recent poor results.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1284 during Wednesday’s European session.