Euro US Dollar (EUR/USD) Exchange Rate Rises amid Risk-Off Mood
The Euro US Dollar (EUR/USD) exchange rate is climbing today. A sell-off in USD is helping the pair to climb today amid dovish Fed bets and a downturn in bond yields. Bets on aggressive interest rate hikes from the European Central Bank may also be pushing EUR/USD higher.
At time of writing the EUR/USD exchange rate is at around $1.0467, which is up roughly 0.7% from this morning’s opening figures.
Euro (EUR) Bolstered by Hawkish ECB Comments
The Euro (EUR) is climbing today. The single currency is potentially being boosted by a risk-off mood as well as weaker US Dollar.
The retreat in global risk appetite comes amid protests across China due to the country’s strict ‘zero Covid’ stance.
Bets on further interest rate hikes from the ECB may also be pushing EUR higher today. Speaking on Monday, board member Klaas Knot stated that the central bank was not doing enough to combat inflation.
Also on Monday, policymaker Peter Kazimir stated that interest rate hikes would continue ‘despite unfavourable economic developments’.
Kazimir also stated the ‘risk of recession in the Eurozone is growing’, which could be capping gains for EUR today.
US Dollar (USD) Drops as Bond Yield Downturn Prompts Sell Off
The US Dollar is slipping against many of its peers despite a risk-off market mood.
A downturn in US bond yields could be contributing to the currency’s losses today as well as a pervasive sell-off.
A continued paring back of Fed rate hike bets may also be weighing on USD today. Markets are pricing in a 50bps rate hike from the central bank in December.
Economists are speculating that a speech from Jerome Powell on Wednesday could confirm a hawkish forward path, however. This could help boost USD and may be underpinning the currency today.
EUR/USD Exchange Rate Forecast: Will US Jobs Data Indicate Tight Labour Market?
Looking to the week ahead for the US Dollar, speeches from several Fed policymakers over the course of the week could keep further pressure on USD. Wednesday’s speech from Fed Chair Jerome Powell will be of particular importance to investors.
On Tuesday a forecast slip in November’s consumer confidence could also weigh on USD if figures print as forecast.
Mixed employment figures for the US this week could prompt movement in USD. Wednesday’s fall in JOLTs job openings could pull USD lower amid signs of a cooler labour market.
On the other hand, Friday’s fall in non farm payrolls could signal a tighter market and boost the US Dollar.
Finally for USD, Thursday’s slip in the PCE price index could see a further paring back of Fed rate hike bets.
For the Euro, a speech from ECB President Christine Lagarde on Monday could help provide some clarity regarding the central bank’s interest rate stance.
A predicted slip in German inflation on Tuesday could cap any gains if investors see it as evidence of more dovish action from the ECB.
Wednesday’s forecast drop in Eurozone inflation could also see investors pare back their bets on further aggressive ECB rate hikes.
If Eurozone unemployment remains at record lows on Thursday then it could see gains for the Euro. A predicted downturn in German retail sales could keep upward momentum for EUR limited, however. Thursday’s meeting of the ECB’s general council could also cause movement in the single currency. Markets will be looking to the meeting for any hints of the central bank’s forward policy.
