The US Dollar to Euro (USD/EUR) exchange rate ended the week higher as concerns over the Greek debt crisis weighed heavily upon the single currency and as manufacturing data out of the USA lent support to the ‘Greenback’.
The US Dollar to Euro exchange rate hit a session high of 1.137 on Friday.
Flash US Manufacturing PMI data for February suggested that activity in the sector increased at its fastest pace since November last year. The PMI rose to a reading of 54.3 in February, up from the preceding month’s figure of 53.9. The figure beat economist expectations for a reading of 53.6. In a PMI, any figure above 50 indicates expansion whilst a number below indicates contraction.
‘Factory output growth ticked higher for a second successive month in February, suggesting the goods-producing sector is on course to make a robust contribution to the economy in the first quarter. However, the rate of growth remains well down on last year’s peaks, and a slowing of new orders growth to the weakest for just over a year looks to have caused employers to take a more cautious approach to hiring. Worries over Russia and the Eurozone also continue to dampen risk appetite,’ said Markit’s chief economist Chris Williamson.
Looking ahead to the coming week the Euro is expected to remain under pressure as the uncertainty over the Greek crisis is likely to continue market sentiment.
IFO Business Climate Data released on Monday is likely to show that concerns over the situation had a detrimental effect on business confidence across the single currency bloc.
Also weighing upon the single currency will be concerns over the situation in Ukraine. Kiev accused Russia of sending more tanks and troops across the border on Friday, increasing expectations that more sanctions will be announced by the West.
The main event of the week for the Euro will be Tuesday’s German GDP report and Eurozone inflation data.
The main event for the US Dollar will be Friday’s fourth quarter GDP second estimate, which could weaken the ‘Greenback’ if it shows a drop from the first estimate.
Also of importance will be Friday’s US Chicago PMI and Consumer sentiment data.
Main events for the USD/EUR exchange rate
Monday February 23 –
EUR – German IFO Business Climate
IFO Expectations
IFO Current Conditions
USD – Existing Home Sales
Tuesday February 24 –
EUR – German GDP Fourth Quarter Final Estimate
Eurozone Inflation Data
USD – CB Consumer Confidence
Markit – Services & Composite PMI
Wednesday February 25 –
USD – New Home Sales
Thursday February 26 –
EUR – German Retail Sales, GFK Consumer Confidence
German Unemployment
Eurozone Confidence & Sentiment
USD – Inflation Data
Friday February 27 –
EUR – German Inflation Rate
USD – US GDP Fourth Quarter Second Estimate