The EUR to USD exchange rate softened on Thursday as a positive durable goods report out of the world’s largest economy increased optimism that growth in the USA’s manufacturing sector will accelerate in the second quarter.
The Euro traded higher against the ‘Greenback’ earlier in the session after a report showed that business confidence in the Eurozone’s largest economy remained upbeat despite the increase of tensions in Ukraine.
The single currency then went on the retreat after European Central Bank President Mario Draghi reiterated his warnings that a strong Euro exchange rate could be the trigger that sees the introduction of additional monetary easing measures.
“A rise in the exchange rate, all else being equal, implies a tightening of monetary conditions, a downward impact on inflation and potentially a threat to the ongoing recovery. If so, this would call for policy action to maintain the current accommodative stance,” Draghi said as he addressed a conference in Amsterdam. He added that a broad-based quantitative easing programme could be used if the medium term outlook for inflation deteriorated.
The US Dollar meanwhile was able to make gains against the single currency and other peers after a report showed that durable goods orders increased more than expected in March.
According to the Washington based Commerce Department orders increased by 2.6% as demand rose across all categories. The increase was the biggest seen since November and beat economist forecasts for an increase of 2%.
Further gains for the US Dollar were restrained however as a separate report showed that the number of US citizens claiming unemployment benefits increased more than expected last week. Claims increased by 24,000 to 329,000 in the week ending on April 19th. The rise was the biggest increase recorded in a month.
The US Dollar could make further gains on Friday if consumer sentiment and services PMI data comes in strongly. The only data release due for the Eurozone is PPI data for Spain and jobs data for France.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3800 ,
Euro,,British Pound,0.8228 ,
Euro,,Australian Dollar,1.4927 ,
Euro,,Canadian Dollar,1.5236 ,
[/table]
