Euro to US Dollar (EUR/USD) Exchange Rate Trading Higher Ahead of Draghi Speech
The Euro to US Dollar (EUR/USD) exchange rate is currently trading higher in the region of 1.3624, as the Euro rises prior to Mario Draghi’s statement today, and the US Dollar softens in anticipation of Janet Yellen’s speech on Tuesday.
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The Eurozone has released Industrial Production data early on Monday, revealing the 0.5% forecast to be accurate, a fall however from the previous 1.4% Year on Year.
Furthermore, the Month on Month figure for May fell to -1.1%, slightly less than the expected -1.2% and falling far below the previous 0.7%.
Tuesday will bring more data for the Eurozone with both the German and Eurozone Economic Sentiment ZEW Survey statistics revealed, alongside the German ZEW Current Situation Survey data.
The German Current Situation Survey figures are expected to fall from 67.7 to 67.4, whilst the German Economic Sentiment data is also expected to see a drop from the former 29.8 to 28.2 in July.
Meanwhile Tuesday will also influence the US Dollar when US Advance Retail Sales are announced prior to the Federal Reserve’s chairwoman, Janet Yellen’s, speech. Investors are hoping Yellen will shed light on the prospect of US interest rate hikes.
The Eurozone caused panic last week as one of Portugal’s biggest banks failed to make a debt repayment, which caused the fragility of the Eurozone to be highlighted once again.
German Chancellor, Angela Merkel, commented without specifically mentioning Banco Espirito Santo: ‘The example of a Portuguese bank showed us in the last few days how quickly the so-called markets are roiled, how quickly uncertainty returns and how fragile the whole Euro construction still is.’
However the President for the European Central Bank, Mario Draghi, has a new stimulus tactic to help boost the economy by assisting banks with over 700 billion Euros.
Bloomberg have commented: ‘The European Central Bank president’s targeted lending program for banks will boost credit for the real economy as planned, and at the same time help keep the financial system flush with cash, according to the Bloomberg Monthly Survey of 45 economists. Draghi may address the topic today when he testifies at the European Parliament in Strasbourg for the first time since elections in May.’
With both Draghi and Yellen speaking over the next few days, the prospects of the EUR/USD exchange rate fluctuating are high, dependent on who can inspire the most confidence.
Wednesday will see another significant day for the US with Net Long-term TIC flows, Industrial and Manufacturing Production data published, whilst the Eurozone will release the Consumer Price Index on Thursday, alongside the US Building Permits, Jobless Claims, and Continuous Claims data.