Euro US Dollar (EUR/USD) Exchange Rate Trends Sideways amid ECB Rate Hike Bets
The Euro US Dollar (EUR/USD) exchange rate is trading within a narrow range today. The currency pair could be seeing losses limited by increased European Central Bank rate hike bets. On the other hand, EUR/USD could be coming under pressure by the closure of the Nord Stream 1 pipeline.
At time of writing the EUR/USD exchange rate is at around $1.0009, virtually unchanged from this morning’s figures.
Euro (EUR) Drops as Gazprom Closes Nord Stream 1 Pipeline
The Euro (EUR) is slipping today despite increased bets on further rate hikes from the ECB. The sudden closure of the Nord Stream 1 pipeline is likely pushing the single currency lower.
The pipeline is expected to reopen on 3 September although analysts remain concerned that Gazprom could enact further cuts to gas flows.
Losses for the currency could be limited however after news that the EU is set to intervene in the energy market. Reports on Tuesday indicated that the EU was preparing to decouple the price of electricity from gas.
Finally, the Euro could be underpinned today by an increase in bets on a 0.75% interest rate hike from the ECB. After figures showed Eurozone inflation hitting 9.1% today, markets began pricing in such a move at the central bank’s meeting next week.
US Dollar (USD) Edges Higher Despite Poor Employment Figures
The US Dollar (USD) is firming against many of its rivals today, although struggling against the Euro. A risk-off market mood is likely lending support to the safe-haven ‘Greenback’ today.
USD may also be seeing boost off the back of sustained Fed rate hike bets. Multiple Fed policymakers have spoken in favour of further interest rate hikes recently.
Fed board members have stated that the scale of any one interest rate hike will be dependent on data, however.
Gains for the US Dollar could be capped by poor today’s poor employment data, however. US companies sharply slowed the pace of hiring in August. Figures released by ADP showed a 132,000 increase to private payrolls versus a forecast increase of 268,000.
EUR/USD Exchange Rate Forecast: Will Eurozone Unemployment Prompt More ECB Bets?
Looking ahead to the rest of the week for the Euro, Eurozone unemployment figures on Thursday could bolster the single currency. If July’s rate of unemployment stays unchanged at record-lows of 6.6% it may push EUR higher off the back of ECB rate hike bets.
A fall in German retail sales on Thursday could have a mixed effect on the Euro. The slump to sales figures for the trading bloc’s largest member could dampen confidence in the single currency.
Friday’s predicted rise in Eurozone PPI figures could have a similar effect and help to boost EUR. A forecast narrowing of Germany’s trade surplus meanwhile could cause the Euro to fall.
For the US Dollar, a downturn to manufacturing sector performance on Thursday could prompt losses in the currency. Growth in August is expected to slow with a forecast reading of 52.
An uptick in initial jobless claims on Thursday could also weigh on USD if investors see it as a sign of a cooling labour market. Friday’s employment data is likely to be the most significant for USD investors this week and could have a mixed effect on the currency. August’s unemployment rate is forecast to remain at a record-low 3.5% which could boost USD. On the other hand, a predicted easing in non farm payrolls could cap any gains.
