The Euro to US Dollar (EUR/USD) exchange rate weakened by more than 1% on Thursday as the European Union warned Greek Prime Minister Alexis Tsipras should stop gambling with the future of his country. Positive US retail sales data supported the ‘Greenback’.
The Euro to US Dollar (EUR/USD) exchange rate was trading in the region of 1.1181 to 1.1331
‘There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over. It is very obvious that we need decisions, not negotiations,’ said European Council President Donald Tusk.
The comments were a blunt warning to Greece to come up with proposals that will be acceptable to its creditors. Tusk’s warnings also added to those made by EU Economics Minister Pierre Moscovici and Bundesbank President Jens Weidmann.
Following Tusks comments the Euro tumbled by more than 1% against the US Dollar and weakened broadly against the Pound Sterling (GBP) and other major peers.
The economic situation is Greece is deteriorating and will increase the pressure on Tsipras to reach an accord with creditors. If no deal is made by July 20 the nation is expected to default on a payment to the European Central Bank (ECB), an event that will increase the prospect of the nation leaving the Eurozone.
Unemployment increased from 26.1% to 26.6% in the first quarter of the year and consumer prices fell deeper into deflation territory in May. Greece’s inflation rate contracted by -2.1% on an annual basis.
The number of Greeks unemployed increased by 2.1% to 1.3 million.
June 18 New Greek Deadline?
On June 18 Greek officials are due to meet with representatives from the International Monetary Fund (IMF), ECB and European Commission. Some economists are setting the meeting as the deadline for a deal to be reached.
‘The meeting will focus on Greek pension reforms, value added tax rates and primary surplus targets. All that and more will be on the table. I don’t think there will be a breakthrough today, but I think there is a good chance that next week will bring an agreement that can be endorsed by the Eurogroup,’ a senior European official said.
The US Dollar received support from data which showed that retail sales in the world’s largest economy increased by 1.2% last month, beating economist expectations for a rise of 1.1%. On a year-on-year basis, sales increased by 2.7%.
The Euro could post more losses on Friday if the latest Eurozone industrial production data comes in below expectations. The main data event for the US Dollar will be the preliminary Michigan Consumer Sentiment report.