Over the past week, the Euro to US Dollar (EUR/USD) exchange rate was trading within the range of 1.0889 – 1.1202.
With predictions of a Greek exit from the Eurozone easing and European growth figures bettering estimates, the shared currency strengthened. Those gains were short-lived however, after talks between Greece and Eurogroup officials dragged on with little sign of a resolution close-at-hand.
After Greek officials reiterated their stance on not crossing electorate red lines with regards to austerity measures, and with the troika of creditors not budging on the requisite reforms for unlocking bailout funds, the shared currency declined versus many of its closest currency rivals during Tuesday’s European session. Given that time is rapidly running out for the Hellenic nation before a large International Monetary Fund (IMF) payment is due in June, predictions that Greece will default on the payment have been amplified significantly. Should the discussions continue to drag out in a similar vein, the likelihood that Greece will fail to receive any aid at all is spooking traders. A forced exit from the Eurozone is becoming ever more likely for the Mediterranean nation.
The US Dollar has generally been advancing versus its major peers over the past week after relatively positive data bucked the trend of a long succession of weak ecostats. The better-than-expected domestic data publications caused traders to bring forwards bets as to the timing of a Federal Reserve benchmark rate hike. Economists’ have estimated that the probability of a December liftoff is at around 61%.
Tuesday’s European session has seen yet more positive domestic data fuel a ‘Greenback’ (USD) surge. April’s Durable Goods Orders declined by -0.5%, in line with the market consensus, but Durables ex Transportation bettered the median market forecast of a 3% increase, with the actual data showing growth of 0.5% in April. Additionally, Consumer Confidence produced a better-than-expected result in May having advanced to 95.4.
Looking ahead, there will be several important data publications pertaining to the EUR/USD exchange rate due out over the remainder of the week. For those trading with the single currency; German Consumer Confidence Survey, German Retail Sales and Italian Gross Domestic Product will be of interest. However, it is safe to say that geopolitics in Greece is likely to overshadow domestic data publications.
For those invested in the US asset, Friday’s US growth data will be of most significance. Should the US Gross Domestic Product data better estimates it will likely cause rate hawks to predict a rate liftoff will be sooner-than-anticipated. MBA Mortgage Applications, Initial Jobless Claims, Continuing Claims, Pending Home Sales, Personal Consumption, Core Personal Consumption Expenditure, University of Michigan Consumer Confidence and the Baker Hughes US Rig Count will all be of significance to those invested in the US Dollar.
The Euro to US Dollar (EUR/USD) exchange rate declined by around -0.81% during Tuesday’s European session.