Euro (EUR) Exchange Rate Falling as a Range of Eurozone Data Disappoints
If you're looking to make an international money transfer, we recommend TorFX.
Such favourable data has allowed the Euro to climb out of eight-month lows in the currency market against other majors.
Session highs against Sterling have reached 0.7918; whilst also attaining 1.3484 against the US Dollar.
The Eurozone has needed positive data releases amid the geopolitical concerns currently affecting a vast amount of countries.
The downing of the Malaysian Airlines flight last week has caused rife global tension with the EU currently deciding on suitable sanctions to place against Russia.
Penalties placed against Russia could prove to severely destabilise and cripple the economy.
One of the sanction options consists of: ‘Restricting access to capital markets for Russian state-owned financial institutions would increase their cost of raising funds and constrain their ability to finance the Russian economy, unless the Russian public authorities provide them with substitute financing. It would also foster a climate of market uncertainty that is likely to affect the business environment in Russia and accelerate capital outflows.’
As Russia’s fate currently hangs in the balance, the Euro remains precarious to any geopolitical escalations with the possibility of a sharp fall on the horizon.
The Euro has seen gains from French, German and Eurozone PMI figures exceeding economists’ forecasts.
German Composite PMI shot up to 55.9 in July, bettering the forecasted 53.8; moreover, German Manufacturing attained 52.9 in July, despite only expected to reach 51.9.
The figures for the Eurozone as a whole crept up slightly further than anticipated also, with Composite PMI reaching 54.0, bypassing the predicted 52.8; whilst Manufacturing PMI reached 51.9, slightly higher than the forecasted 51.7.
The Eurozone has needed positive figures to demonstrate recovery is still in motion after producing a string of unfavourable data, however amid such political events; the Euro is unlikely to be able to retain any gained strength for long.
An expert in the field Geoff Yu stated: ‘The activity data offsets some of the weakness we saw last month and that has helped the Euro. But there are concerns about domestic growth in the Eurozone and possible sanctions on Russia are likely to have an impact.’
The Euro although on an upward trajectory, looks set to remain volatile amid global disruptions; the current GBP to EUR exchange rate stands softer at 1.2620; meanwhile the US Dollar is trading at 0.7420 against the Euro.
UPDATED 16:15 GMT July 24 2014
Thursday afternoon has seen the Euro (EUR) remain bullish in the currency market against other majors as the upbeat Eurozone figures have given the Single Currency a boost currently trading at 1.3466 against the US Dollar (USD) and 0.7934 versus the Pound (GBP).
However the Euro is still trading amid the ongoing Ukraine conflict, causing concerns of the Eurozone’s fate.
Chief Economist for Markit who carry out the PMI surveying has noted: ‘We’ve seen a growing number of companies reporting that their orders are down or that their outlooks for the year have deteriorated because of the Ukraine situation.’
With Russia presently facing severe EU sanctions, the Eurozone looks to be in for a bumpy ride. Representative for the Association of German Chambers of Commerce and Industry, Volker Treier, commented: ‘We had been expecting exports to Russia to rise by around 6% this year. Now, with a new phase of sanctions [the export drop] will be more, maybe 15%. That won’t only affect German exporters, but the whole European economy.’
For now the Euro can revel in its current gains; however, as global politics develop the Euro could fall victim to a massive decline.
Euro Exchange Rate Unlikely to Retain Gains
UPDATED 10:03 GMT July 25 2014
The Euro is unlikely to be able to retain any gains made on Thursday following surprising PMI figures, as Friday has seen the publication of more disappointing Eurozone data.
German Consumer Confidence data exceeded expectations rising to 9.0 in August; however, German IFO Business Climate figures for July failed to reach the forecast 109.4, instead published at 108.0.
Furthermore both German IFO Current Assessment and IFO Expectations data proved unfavourable, causing great disappointment after yesterday’s positive figures.
A London based trader commented: ‘The Euro has recovered a bit overnight. IFO might be the key today.’
With the release of such disappointing data the Euro is likely to plummet, already amid geopolitical tensions that pose a severe threat to the Single Currency.
The current EUR to USD exchange rate is residing at 1.3446, whilst the Euro trades at 0.7918 against the Pound; both figures are edging toward the session lows.