Euro US Dollar Exchange Rate Steady as US Economic ‘Lift-Off’ is ‘Well into the Future’, says Fed Chair Powell
The Euro US Dollar exchange rate held steady this morning following last week’s dovish rhetoric on monetary policy from the US Federal Reserve. The pairing is currently fluctuating around $1.19.
The US Dollar (USD) failed to gain against the single currency this morning after last week saw Fed Chair Jerome Powell strike a dovish tone, saying that ‘We’re very far from maximum employment, for example, it’s a consideration for the future’.
Powell also added that ‘[l]ift-off’ for the economy ‘is well into the future’.
Patti Domm, CNBC Markets Editor, commented on the Fed’s statement:
‘It appears to be a material shift in how the Fed sees the risks around inflation. That’s how I read it. It shows the Fed sees upside risks to inflation and that has presumably followed through to the dot plot.’
Risk-off market mood has failed to significantly buoy demand for the safe-haven ‘Greenback’ today, despite rising cases of the Covid-19 Delta variant in Australia, Indonesia, Malaysia, and Thailand.
Instead, US Dollar traders are awaiting today’s speech from Randal Keith Quarles, a member and vice chair for supervision for the Federal Reserve Board of Governors.
Any dovishness about the outlook for the US economy, however, could see demand pick-up for the safe-haven US Dollar later today.
Euro (EUR) Exchange Rate Steady Despite Growing Optimism in Eurozone Economy
The Euro (EUR) held steady against the ‘Greenback’ today as confidence in the Eurozone’s economy continues to grow after it edges towards pre-pandemic levels.
Chris Williamson, Chief Business Economist at IHS Markit, commented on the state of the Eurozone’s economy last week:
‘The Eurozone economy is booming at a pace not seen for 15 years as businesses report surging demand, with the upturn becoming increasingly broad-based, spreading from manufacturing to encompass more service sectors, especially consumer-facing firms.’
Thanks to the European Union’s (EU) vaccination programme, key economies in the Eurozone – such as Germany and France – have begun to ease lockdown restrictions.
Williamson also added that the data for the second quarter is set for an ‘impressive expansion’ and ‘even stronger growth in the third quarter’.
EUR/USD Exchange Rate Forecast: Could Rising Covid-19 Infections Boost Demand for the Safe-Haven US Dollar?
Euro (EUR) investors are awaiting tomorrow’s speech from the European Central Bank (ECB) President Christine Lagarde.
If Lagarde strikes a hawkish tone in her outlook for the Eurozone economy, then we would see the EUR/USD exchange rate head higher.
Tomorrow will also see the release of the flash German inflation data for June. Could an improvement in the Eurozone’s largest economy buoy the single currency?
US Dollar (USD) traders will be eyeing tomorrow’s publication of June’s US consumer confidence gauge.
However, we could see the EUR/USD exchange rate fall this week if risk sentiment continues to sour over rising Covid-19 infection rates worldwide – and particularly in Asia.