US Dollar to Euro (USD/EUR) Exchange Rate Clings to Gains; ‘Buck’ Bullish
The US Dollar (USD) is trading amid an extremely significant week; Wednesday saw the ‘Buck’ trending between the region of 0.7454 and 0.7480 versus the Euro (EUR), following a wealth of favourable data releases and renewed positivity surrounding the US economy.
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Despite the US being subject to poor performance in the first quarter of 2014, the second quarter has expanded, bringing positive figures and optimism for the US recovery.
Highly influential Gross Domestic Product figures grew by an unpredicted, yet highly favourable 4.0% in the second quarter, bypassing forecasts of 3.0%. Moreover, Personal Consumption statistics surprised by rising by 2.5% during the second quarter after only being predicted to reach 1.9%.
An expert in the field Jim Baird noted: ‘Whether or not the economy can break out of its sub-par growth pace of the last few years remains to be seen, but stronger job creation and surging confidence are positive signs.’
Consumer Confidence skyrocketed on Tuesday at 90.9, quashing economists’ predictions of 85.4.
Moreover Economic Confidence data for the Eurozone proved surprising amid such high geopolitical tensions reaching 102.2 in July. The EU is presently placing sanctions against Russia as a result of the recent downing of the Malaysian Airlines passenger plane flight MH17. As sanctions against Russia are enforced, the Eurozone will feel the effects of the pressure the Russian economy will be placed under.
Economist Howard Archer commented: ‘The introduction of increased sanctions against Russia could further impact on sentiment.’
Thursday however, will continue on with important US data publishing, as Initial Jobless Claims and Continuing Claims numbers are expected at 13:30GMT. Initial Jobless Claims are expected to rise by 302K; however, Continuing Claims figures are forecast to drop to 2491K, lower than the previous 2500K.
Less favourable figures on Wednesday came by way of the US Employment Change, only achieving 218K new jobs despite a more buoyant 230K forecast for July. Moreover the US economy surprised in June, reaching a whopping 281K which encouraged optimism that employment numbers could surprise again. However, the US economy is proving to be more robust, revelling in a consecutive four-month achievement of creating in excess of 200K employment positions.
Economist Chris Rupkey commented: ‘It looks like employers are not shy about adding to head count. The recovery is on solid ground and we are expecting the data to show that in the month of July.’
The US economy appears to be progressing well, with many positive data releases exceeding expectations.
Economist John Silvia stated: ‘Due to the strength in the labour market, we maintain that the weakeness in economic growth in the first quarter is a one off event and the trend in labour market better represents the current direction of the economy.’
Friday will prove to be a massive day for the US Dollar with Change in Non-Farm Payrolls, Personal Consumption Expenditure, Unemployment Rate, Average Hourly Earnings, Average Weekly Hours data publicised to name but a few.
An expert in the field, Thierry Albert Wizman suggested: ‘There may be enough hiring in the state and local level to bring non-farm payrolls up to the optimistic consensus or maybe slightly higher.’
Meanwhile Thursday will see the publication of German Unemployment Rate and Unemployment Change figures alongside the Eurozone Consumer Price Index and Eurozone Unemployment Rate statistics, which gain a little stability for the Euro amid global conflict if favourable.
The US Dollar is likely to rally even higher against other currency majors if the data is favourable, whilst further increasing pressure on the Federal Reserve to reassess fiscal policy.
During Thursday’s European session the US Dollar to Euro exchange rate consolidated gains following the publication of a mixed bag of economic reports for the Eurozone.
German retail sales were shown to have increased by considerably more than anticipated on a month-on-month basis while the level of unemployment in the nation declined by 12,000, over double the forecast amount.
These upbeat figures were followed by reports showing that the level of joblessness in Italy and the Eurozone as a whole also declined unexpectedly.
However, as persistently low inflation is one of the European Central Bank’s biggest concerns, the news that the Eurozone’s year-on-year CPI came in at 0.4% in July (down from 0.5%) in June did weigh on the Euro.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.7465 – little changed from the day’s opening levels.