Euro (EUR) Exchange Rate reaches Three-Week high against the US Dollar
The Euro (EUR) exchange rate climbed to its highest-level in three-weeks against the US Dollar (USD) on Thursday as speculation rose that investors were scaling back their bets that the European Central Bank (ECB) will unveil a quantitative easing policy at next week’s policy meeting.
If you're looking to make an international money transfer, we recommend TorFX.
Yesterday’s Eurozone inflation data came in below economist forecasts but was good enough to warrant economists to reduce their expectations that the ECB will be pressured into taking action next week to counter the threat of deflation.
Inflation in the 18-member Eurozone ticked higher in April to 0.7%, below forecasts for a rise to 0.8% but better than March’s figure of 0.5%.
“Many investors were shorting the Euro on anticipation of ECB stimulus. That’s looking very unlikely frankly at this time and the market is cutting Euro shorts,” said the head of hedge-fund sales at Mizuho Bank in an interview with Bloomberg.
“Meanwhile, Mediterranean Europe is performing well. The move is down to sentiment shift.”
The US Dollar meanwhile was weakened by the release of GDP data which came in well below forecast.
According to the Washington based Commerce Department, US GDP grew at an annual pace of 0.1% in the first quarter, well below expectations for an increase of 1.2%.
The Euro received some support on Thursday from data which showed that industrial activity in Ireland hit a three-year high.
According to Markit’s Purchasing Managers Index activity advanced to 56.1 in April from the 55.5 recorded in March.
Output in the Netherlands also increased for a tenth consecutive month.
Euro makes gains on the British Pound
Against the British Pound (GBP), the Euro eased slightly due to positive UK house price and manufacturing data.
Markit’s manufacturing PMI climbed to 57.3 in April, a strong rise from the previous month’s figure of 55.8.
Any reading over 50 shows the sector expanded, and 57.3 is the highest reading since last November. It’s much stronger than economists expected, too.
Currently the Euro is trading against the British Pound in the region of 0.8227 and is trading against the US Dollar in the region of 1.3886.