The US Dollar to Euro (USD/EUR) exchange rate weakened more than 1% on Wednesday to slide to its weakest level in a week.
The US Dollar to Euro (USD/EUR) Exchange Rate Fell To a Session Low Of 0.8799
Earlier in the session, the Euro climbed against the US Dollar as data released showed that the French and Italian economies expanded at a stronger rate than expected in the first quarter of 2015.
Following the release of the data, the Euro was able to climb to a session high of 1.1330
Those gains were relatively short-lived however as data published by Eurostat showed that Eurozone GDP grew by just 0.4% in the first quarter, up from the 0.3% seen in the final quarter of 2014 but below economist forecasts for a rise to 0.5%. On a year-over-year basis, the bloc’s GDP grew 1.0% after a 0.9% expansion in the three months to December. Economists had forecast growth of 1.1%. German and Greek GDP figures were worse-than-forecast.
A separate report showed that the Eurozone’s industrial production declined by 0.3% in March, a figure that surprised economists who had been expecting an increase of 0.2%. The preceding months figure was also revised down from 1.1% to 1.0%.
As the session progressed, the Euro took advantage of more weak data out of the US. The ‘Greenback’ pushed lower against the majority of its most traded peers after a report showed that retail in the world’s largest economy rose less than expected in April. The data added to concerns over the strength of the economy and caused investors to speculate that the Federal Reserve will not hike interest rates until later in the year.
According to the Washington based Commerce Department, US retail sales stagnated on a month-on-month basis in April. Economists had been forecasting for a rise of 0.2%. On an annual basis, sales rose by 0.9%, below the 1.5% rise expected. The yearly increase was the smallest seen since October 2009. Sales excluding car sales were shown to have increased by just 0.1%.
‘It’s certainly a disappointing report. We are going to need to see some of the categories that were weak in April firm up in May and June. Absent that, there will be some head scratching that the economy is not coming back as strong as expected,’ said an economist from RBS Securities.
The US Dollar could make further declines on Thursday if the latest US Jobless claims and Producer Price Inflation (PPI) data disappoint.