The Euro US Dollar exchange rate has declined by -0.5% today, following the news that Greek officials have reached an agreement to unlock the next band of bailout funding.
- EUR USD rate drops to 1.05 – USD EUR rate rises to 0.94
- Euro slides on profit-taking after Greek debt deal – Initial German PMIs beat forecasts
- US Dollar rallies after Fed’s Mester supports rate hikes – Official ‘comfortable’ with hiking rates
- Mixed forecast for incoming Eurozone inflation figures – Optimism for imminent US PMI stats
The eleventh hour agreement to grant continued Greek access to bailout funding initially boosted the EUR USD exchange rate on Monday, though profit-taking and returning investor scepticism has largely eroded these gains.
While Greek officials were pleased that they had secured further bailout funds in exchange for more economic reforms dictated by creditors, other saw the news as the beginning of another cycle of debt expansion and economic hardship. In particular, the opposition New Democracy Party claimed;
‘The government is celebrating the return of the institutions to Greece while the economy is sinking’.
Further Eurozone developments today have failed to grant the Euro any real support; both German and Eurozone-wide PMI flashes for manufacturing, services and the composite field have risen above forecasts in February.
The US Dollar has jumped by 0.5% against the Euro today, with hawkish statements from the Federal Reserve cementing its strength.
As well as Cleveland Fed President Loretta Mester stating;
‘I’m comfortable that inflation is near its goal and moving toward its goal…I’d be comfortable with an increase in the (federal) funds rate at this point, if the economy keeps going the way it’s going’
Fellow Fed official Patrick Harker also declared;
‘I would not take March off the table [for a rate hike] at this point. We’ll have to see how it plays out in the next few weeks’.
These comments largely drew attention away from Donald Trump, who has continued to be a negative influence on the US Dollar since his unorthodox campaign speech in Florida on the weekend.
German and Eurozone data releases will remain in focus over Wednesday’s trading, with the morning bringing German Ifo business conditions figures for February. Forecasts have been for a drop in opinions on business climate, expectations and current conditions.
Shortly after, inflation rate figures for the Eurozone are due, which are set to show a monthly drop in January but a rise from 1.1% to 1.8% annually.
US news of note is due this afternoon, covering Fed speeches from Neel Kashkari, another from Harker and one tonight from John Williams. The early afternoon is due to show PMI flashes for February, which are expected to rise for both manufacturing and services.
Current EUR USD Interbank Exchange Rates
At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.05 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94 today.
