The Euro to US Dollar exchange rate rallied by over 1.5% during Wednesday’s European session.
After Greece managed to repay the International Monetary Fund (IMF) €200 million, the single currency advanced versus the majority of its most traded currency rivals. Aiding the uptrend was improved services growth in many European countries.
The US Dollar, conversely, dived versus the majority of its most traded currency peers after yet more disappointing domestic data. A string of poor data results has caused futures traders to pare bets as to the timing of a Federal Reserve rate hike.
The Euro to US Dollar exchange rate is currently trending in the region of 1.1358.
Against the general consensus, Greece managed to pay the IMF €200 million of its substantial debt. This was well received by traders and promoted a single currency rally. However, there is a much larger sum to pay on May 12
th
and most analysts predict the cash-strapped nation will fail to pay in time.
Additional Euro gains can be attributed to positive services growth in many of the currency-bloc’s influential economies. France, Spain and Italy showed notable gains, in addition to Ireland. Chris Williamson, Chief Economist at Markit said; ‘A key mantra from the ECB has been that monetary stimulus will only be successful if accompanied by structural reforms, and the survey confirms that those countries which have made the greatest efforts towards reforms are enjoying the strongest economic growth. Spain and Ireland in particular are both booming again. Companies in Spain are seeing the largest inflows of new work for 15 years, while Ireland is enjoying one of its longest growth spells since the dot-com boom. Italy is also seeing an improvement in growth, but the pace of expansion is well below those seen in Ireland and Spain.’
The US Dollar, meanwhile, dived versus nearly all of its major peers after domestic data produced disappointing results. MBA Mortgage Applications declined by -4.6%, adding to the previous declination of -2.3%. ADP Employment Change came in at 169,000 in April, missing the median market forecast figure of 200,000.
‘April job gains came in under 200,000 for the second straight month,’ said Carlos Rodriguez, president and chief executive officer of ADP. ‘Companies with 500 or more employees had the slowest growth.’
Mark Zandi, chief economist of Moody’s Analytics, said, ‘Fallout from the collapse of oil prices and the surging value of the Dollar are weighing on job creation. Employment in the energy sector and manufacturing is declining. However, this should prove temporary and job growth will reaccelerate this summer.’
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains
Although the geopolitical situation in Greece is far from resolved, the Euro to US Dollar exchange rate is likely to hold gains for the remainder of Wednesday’s European session. This is further solidified by an absence of domestic data to curb the trend.
Thursday ought to se heightened volatility for the pairing with several influential data publications due pertaining to both Europe and the US.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the range of 1.1173 – 1.1368.