UPDATE
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.3% on Wednesday morning.
After China’s Consumer Prices declined beyond expectations, the shared currency advanced versus its major peers. This is due mostly to a weakened US Dollar after signs of a China slowdown weighed on Federal Reserve interest rate bets. Given that the EUR/USD conversion rate is negatively correlated, the softer USD led to a stronger Euro. Eurozone Industrial Production, due for publications later on Wednesday morning, has the potential to provoke changes for the common currency.
As explained above, fears of a Chinese economic slowdown caused the US Dollar to decline versus its major peers. Additional losses can be attributed to Fed official James Bullard who stated that it would be very unlikely that the Fed will shift gears and hike rates in October after only one month of additional data. Later today, Advance Retail Sales should provoke volatility.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1412.
Yesterday…
EUR/USD Conversion Rate Predicted to Climb after German Inflation Met with Estimates
The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.2% on Tuesday afternoon.
In response to German data meeting with estimates, the single currency advanced versus its major rivals. The final figure for September’s German Consumer Price Index came in line with expectations of 0.0%. Whilst this is by no means a positive score, the avoidance of dropping into negative territory is positive for two reasons; the first being that the period of low inflation could indeed be transitory as many analysts have predicted; the second being that the European Central Bank (ECB) may now consider holding off policy expansion in the hopes that the current program of quantitative easing will be enough to provoke price pressures.
Gains have been somewhat slowed, however, after the German ZEW Economic Sentiment survey came in well below expectations. Sentiment in Germany is likely to remain negative amid so many uncertainties regarding the extend of the ramifications from the Volkswagen scandal.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1374.
USD/EUR Exchange Rate Forecast to Strengthen on Bullard Speech
With a distinct lack of influential US economic data on Tuesday, the US Dollar saw subdued trade in the early stages of Tuesday’s European session. This was mainly the resultFederal Reserve opacity and the general confusion regarding the timing of a benchmark rate hike. However, after a hawkish speech St. Louis Fed President James Bullard stated that the time was ripe for a benchmark rate hike, the US asset climbed versus many of its currency rivals.
In his last speech, Bullard stated; ‘We have a strategy. The strategy is go a little bit earlier and go gradually, so that we’re not marching up 25 basis points a meeting the way we were in 2004 to 2006, which ultimately turned out to be behind the curve anyway. That will give us a lot of flexibility to react to all the problems that we see out there and the low inflation issue.’
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1343 during Tuesday’s European session.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate on German ZEW Survey
With traders anxious to see how badly German economic sentiment has been damaged by the Volkswagen sandal, the Euro to US Dollar (EUR/USD) exchange rate is likely to fluctuate leading up to and in the immediate aftermath of the release. The James Bullard speech also has the potential to provoke EUR/USD volatility.
Wednesday’s EUR/USD trade is likely to be a lot more active with several influential data publications with the potential to provoke volatility. Eurozone Industrial Production will be of interest to those invested in the Euro, and US Advance Retail Sales data is likely to be a market mover.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1411 today.