US Dollar (USD) Exchange Rate Forecast to Decline as Poor Jobs Data Weighs
The US Dollar to Euro (USD/EUR) exchange rate softened by around -0.69% on Thursday afternoon.
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The US Dollar to Pound Sterling (USD/GBP) exchange rate edged higher by around 0.19%.
At the beginning of the European session the US Dollar softened as a result of speculation the recent surge was overdone. In addition, the Federal Reserve stress tests on Wall Street banks showed that some institutions would struggle to withstand another financial crisis. Mixed economic data results added to the ‘Greenback’ (USD) depreciation.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9413.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6705.
US Dollar (USD) Exchange Rate Dives on Fed Stress Tests
The stress tests undertaken by the Fed revealed that a total of six banks stumbled, with the Bank of America barely scraping through. ‘Our capital plan review helps ensure that the capital distribution plans of large banks will not compromise their ability to continue lending to businesses and households even during a period of serious financial stress,’ Federal Reserve Governor Daniel Tarullo said in the press release.
The ‘Greenback’ also struggled as a result of disappointing sales data. Advance Retail Sales declined by -0.6% in February despite the median market forecast of 0.3% sales growth. The soft result has been blamed on unseasonably cold weather.
‘It looks like a big weather effect here,’ said Carl Riccadonna, Bloomberg Intelligence chief US economist, highlighting the declines in weather-sensitive categories including apparel, restaurants, building materials and vehicles. ‘A lot of February’s data is going to look muddy. This is just a blip. The consumer is just fine.’
The US Dollar depreciation has somewhat slowed, however, thanks to some positive results from labour market data. Initial Jobless Claims came in at 289,000 which was well below the market consensus of 305,000.
US Dollar (USD) Exchange Rate Forecast to Recover Losses
Given that some of the US data printed positively, and with increased demand for safe-haven assets amid geopolitical tensions, the US Dollar is likely to recover Thursday’s losses. With that being said, Friday’s University of Michigan Confidence data is likely to provoke ‘Greenback’ volatility.
The US Dollar to Euro (USD/EUR) exchange rate was trending within a range of 0.9359 and 0.9523.
The US Dollar to Pound Sterling (USD/GBP) exchange rate was trending within the parameters of 0.6656 and 0.6711.