Euro (EUR) Exchange Rate: Euro Rallies to Two-Month High against the US Dollar
This time last week economists were betting that the European Central Bank would introduce additional stimulus to shore up the Eurozone’s economic recovery.
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However, after a stream of better-than-expected data for the 18-nation currency bloc (including surprisingly strong services and retail sales figures) the central bank refrained from making any adjustments to stimulus.
The ECB also positively revised its growth forecast for the currency bloc and talked down inflation concerns.
ECB President Mario Draghi stated; ‘We have taken and are still taking early decisive action on the monetary policy front. Incoming information confirms that the moderate recovery of the Euro area economy is proceeding in line with our previous assessment.’
The central bank now envisages economic growth of 1.2 per cent in 2014, higher than the previous forecast for 1.1 per cent expansion.
The Euro’s advance on the US Dollar was aided by the news that US factory orders declined by more-than-expected in January.
Investors had been expecting a decline of 0.5 per cent in January, but orders actually fell by 0.7 per cent following a decline of 2.0 per cent which was larger-than-forecast.
The Euro also advanced on the Pound. Sterling experienced minimal movement after the Bank of England delivered its own rate decision earlier in European trading. Like the ECB, the BoE opted to leave stimulus unaltered.
Tomorrow’s industrial production figures for the Eurozone could inspire currency movement, but investors will largely be focusing on the influential US non-farm payrolls report. As it stands, industry experts are betting that the report will fall short of forecasts. If that does indeed prove to be the case the EUR/USD pairing could end the week on an even higher note.
Currently the Euro is trading against the Pound in the region of 0.8275 and is trading against the US Dollar in the region of 1.3834