EUR to USD Exchange Rate Static after Key US Labour Market Data
The US Dollar has enjoyed a bullish run of late amidst trader speculation of a near-future benchmark interest rate hike. Demand for the ‘Greenback’ (USD) has halted temporarily on Thursday as traders await the US labour market data due for publication in the afternoon. Should the labour market data produce negative results the recent influx in demand for the ‘Buck’ (USD) would have been in vain.
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With demand for the US Dollar gathering momentum over the past week the pressure on the Federal Reserve to ease their quantitative easing stimulus and raise interest rates has mounted exponentially. Fed officials have indicated that such measures rely on positive results from US labour market data.
The Euro has generally struggled from the European Central Bank’s recent loose stance on monetary policy. European economic data has been particularly sparse over the past week with any positive results having been overshadowed by the ECB’s rate revisions and stimulus initiative.
The Euro to US Dollar exchange rate has hit a low today of 1.2894.
Thursday has been a little better for those invested in the Euro. As traders become accustomed to the ECB changes; positive economic data has more of an effect to boost demand. The German EU Harmonised Consumer Price Index equalled the market consensus of a 0.8% growth and the German Consumer Price Index also matched the forecast figure of 0.8%.
Thursday has also seen the publication of the European Central Bank’s monthly report. In general the report deviated very little from the press release following the interest rate revisions. Traders may be a little concerned over a unanimous opinion that further stimulus could be initiated if the pace of inflation continues to slow.
A large part of the report suggested that Italy needs to improve its fiscal position in order for the government to meet its current deficit target. The report stated; ‘Risks surrounding the achievement of the government’s 2014 deficit target (2.6 percent of GDP) remain, especially in the light of economic developments being worse than expected […] looking ahead, it is important to further strengthen the country’s fiscal policy position in order to ensure compliance with the requirements of the Stability and Growth Pact, especially those concerning the reduction of the general government debt-to-GDP ratio’.
US Dollar demand has held steady on Thursday ahead of the key labour market data due for publication in the afternoon. If the data from continuing claims and initial jobless claims reveals a positive declination the pressure on the Federal Reserve to act would be difficult to ignore. Conversely, should the data prove to be negative, the Fed will have good reason to hold off rate revisions and continue with the current quantitative easing stimulus.
The Euro to US Dollar exchange rate has reached a high today of 1.2940.
The Euro to US Dollar (EUR/USD) exchange rate managed to post a modest gain yesterday as US initial jobless claims figures disappointed expectations. However, the pairing stabilised and was trending in a fairly narrow range ahead of the publication of the day’s big US news – Advance Retail Sales. If sales are shown to have risen by the 0.6% anticipated by economists, the US Dollar is likely to be supported and the EUR/USD exchange rate could dip before the weekend. Of course investors will also be taking an interest in the Eurozone’s employment and industrial production reports. Next week the ZEW economic sentiment surveys for Germany and the Eurozone as a whole could be a significant cause of EUR/USD movement.