Euro (EUR) Exchange Rate Fluctuates after Disappointing Confidence Data
After a period of instability for the Euro, the Single Currency has recently been clambering back up against some of its peers.
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However, with poor US GDP data out this week, currencies the Euro had been gaining against have quashed it once more.
The Euro/US Dollar pairing has been quietly trading this week at around the 1.36 region.
The Pound has seen a rise again, despite Mark Carney’s misleading approach to the discussion of interest rate hikes recently.
Although there has been great speculation as to when the rate rise will happen, the Governor for the Bank of England has stated that they will be slow and gradual.
Economists believe that a report due to be released tomorrow will prove the British economy has grown by 0.8% in the first quarter of the year.
Carney’s fear that mortgage debt could be the downfall to the UK recovery has led to the BoE introducing instrumental methods in today’s Financial Stability Report in an attempt to quell high risk mortgages and customer money owing.
Morgan Stanley currency expert, Ian Stannard, has suggested: ‘Sterling gained some support because the measures are in line with indications we got from Carney that the FPC’s approach would be slow and gradual. It’s not going to have an impact on monetary police and rate-hike expectations are going to remain in place.’
The Pound has risen up to a high point of $1.7014 against the US Dollar and is adopting a bullish stance in the currency market, rallying against peers like the Euro. The Euro/Pound pairing has sunk down to a low of 0.7978 on Thursday, with the Bearish Euro unable to compete.
The Euro saw disappointing French PMI data on Tuesday this week; a worrying statistic in the market indicating contraction for the Eurozone’s second biggest economy.
Tuesday also saw Germany’s PMI results disappoint forecasts slightly, but stay afloat above the 50 level to suggest growth. However positive Consumer Confidence data was reported on Wednesday, showing a rise from 8.6 to 8.9 and beating expectations that the result would stagnate.
Moreover it is hoped that Thursday afternoon will bring favourable French Jobseeker results which may help to counteract the negative data published earlier this week.
Friday will reveal the German Import Price Index and French GDP data which could help the Euro against the other strong majors. Also published will be Eurozone Business Climate Indicator, Consumer Confidence, Economic Confidence and Industrial Confidence, followed by German Consumer Price Indexes.
The US Dollar seems set to experience a period of weakness with no hope in sight for interest rate rises. However it seems unlikely that the Euro will be able to gain much against its peers when the low US Dollar rates have encouraged climbing from other currencies.
Updated at 11:12 GMT, 27 June 2014
Friday has seen the release of the Eurozone Business Climate Indicator for June.
The measure fell from May’s 0.37 to 0.2 in June, despite predictions of a rise to 0.40. Eurozone Consumer Confidence data slipped from -7.4 to -8 and a fall in Economic Confidence from 102.6 to 102 quashed predictions of a rise to 103.0.
Another disappointment was seen by way of Industrial Confidence data falling from -3.1 to -4 and ignoring predictions of a rise to -3.0. However, Eurozone Services Confidence did rise to meet the predicted level of 4.0 in June from the former 3.8 reading in May.
This afternoon will see the release of other data for the Eurozone by way of German CPI figures.
The inflation report is expected to be favourable, with the index rising by 0.2% in June.
The Euro needs to see positive results today after a poor week; however, next week could be a little better for the Common Currency as Germany’s Retail Sales report is due for release on Monday. Economists trying to predict the Euro’s next move remain conflicted, however Barclays are of the opinion that the Euro is set to fall further.
Currency specialist for Barclays Ajay Rajadhyaksha has suggested: ‘We have a fairly high degree of conviction about our Euro call. That conviction is driven almost exclusively by our fundamental view that the monetary policy in the ECB is going to diverge very significantly from that in the US and that in the United Kingdom.’
The Euro is currently trading at $1.3613 against the ‘Buck’, and 0.7996 against the British Pound.