The past week has seen the Euro to US Dollar (EUR/USD) exchange rate gradually advance, with an initial low of 1.1104 later succumbing to a high of 1.1360.
Euro’s Appreciation Last Week Marred by Mixed Data
Monday opened on a fairly low note, given that the high-impact Eurozone Sentix investor confidence figure for February fell from 9.6 points to 6 points. Tuesday continued the trend of negativity, with Germany’s Industrial Production, trade balance, current account, imports and exports in December either falling based on previous printings or failing to match up with expectations.
Wednesday was essentially devoid of high impact data, although Italy’s falling January industrial production and Portugal’s rising Q4 unemployment rate both kept the Euro down against the competition in the absence of wider economic announcements.
Thursday brought a reversal of fortune, as while major data was still thin on the ground, Greece still managed to deliver a pleasant surprise in the form of the November unemployment rate, which fell from 24.7% to 24.6%.
The week closed on an ambiguous note for the single currency, as in both Germany and the Eurozone the Q4 GDP results were mixed.
Euro Slides Today with Eurozone Data Scarce
The Euro has only been influenced today by economic data from the morning, which was by no means positive. The Eurozone’s Construction Output in December fell from 0.9% to -0.6% on the month and from 0.3% to -0.4% on the year, while Greece posted negative inflation.
US Dollar Softened Last Week by Dovish Fed Speeches
The Federal Reserve was the US Dollar’s worse enemy last week, as over Wednesday and Thursday Fed Chair Janet Yellen spoke to congressional officials over the past and future activities of the central bank. The overall tone was dovish, with the policymaker citing a range of outside influences that made the next rate hike increasingly unlikely to be soon.
The week so far for the US Dollar experience minimal movement; domestic data has been thin on the ground and a radical speech by Fed newcomer Neel Kashkari to limit the size of national banks has only added to the growing levels of investor unrest.
This Week’s EUR/USD Exchange Rate Forecast
For the remainder of the present week, Euro/US Dollar exchange rate movement may occur as a result of tonight’s release of the Fed’s January meeting minutes, tomorrow’s US Claims stats for February and Friday’s US Inflation Rate result for January.
At the time of writing, forecasts were for a disappointing rise in the numbers of initial and continuing claims made, while inflation was expected to leap up for the base annual result from 0.7% to 1.3%. If accurate, this outcome would likely strengthen the US Dollar considerably, given that many Fed members have cited low inflation as a limiting factor in their interest rate hike decisions.
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