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FX Today: EUR/USD at Nine-Year Low ? Eurozone Inflation Raises Stimulus Bets
Published: 7 Jan at 5 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, New Zealand Dollar Exchange Rate, Currency Exchange, Forex, Rupee Exchange Rate, Euro Crisis, Exchange Rates, Economy, Inflation,
The Euro was trading in the region of a nine-year low against the US Dollar on Wednesday having fallen by almost 0.5% over the course of the European session in response to less-than-impressive economic reports from the currency bloc. The EUR/USD pairing hit a low of 1.1799 after the Eurozone’s Consumer Price Index showed that annual inflation fell to -0.2% in December – putting the region in deflation territory. Earlier in the day, Germany’s retail sales report showed an unexpectedly strong month-on-month sales gain and the nation published encouraging employment figures. Industry expert Georg Graf Waldersee; ‘The fact that Germany was able to maintain a reasonably stable employment rate proved in subsequent years - and to this day - to be a godsend.’
However, other Eurozone reports showed record high unemployment in Italy, consistent joblessness in the Eurozone, a fall in the currency bloc’s retail PMI, and (of course) negative Consumer Price Inflation. The Euro softened almost across the board after the data was published, sliding notably against peers like the New Zealand Dollar and Indian Rupee. Currency strategist Sean Callow observed; ‘With Draghi looking increasingly likely to override German objections to QE at the Jan. 22 ECB meeting and the US economy firmly on track for higher interest rates this year, any Euro bounces should be modest.’
The Euro to US Dollar exchange rate also came under pressure as the US trade deficit narrowed by more than expected and the ADP employment change report surprised to the upside. The EUR/USD pairing is more than likely to experience movement following the publication of the US Federal Open Market Committee meeting minutes. The minutes are expected to shed light on why the FOMC adapted its interest rate rhetoric at the last policy meeting. Any hawkish remarks or hints regarding the timing of the first increase in borrowing costs could give the US Dollar a boost. Tomorrow’s economic reports for the Eurozone, including the region’s confidence and retail sales stats, will also be of particular interest.
However, other Eurozone reports showed record high unemployment in Italy, consistent joblessness in the Eurozone, a fall in the currency bloc’s retail PMI, and (of course) negative Consumer Price Inflation. The Euro softened almost across the board after the data was published, sliding notably against peers like the New Zealand Dollar and Indian Rupee. Currency strategist Sean Callow observed; ‘With Draghi looking increasingly likely to override German objections to QE at the Jan. 22 ECB meeting and the US economy firmly on track for higher interest rates this year, any Euro bounces should be modest.’
The Euro to US Dollar exchange rate also came under pressure as the US trade deficit narrowed by more than expected and the ADP employment change report surprised to the upside. The EUR/USD pairing is more than likely to experience movement following the publication of the US Federal Open Market Committee meeting minutes. The minutes are expected to shed light on why the FOMC adapted its interest rate rhetoric at the last policy meeting. Any hawkish remarks or hints regarding the timing of the first increase in borrowing costs could give the US Dollar a boost. Tomorrow’s economic reports for the Eurozone, including the region’s confidence and retail sales stats, will also be of particular interest.
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Source: moneytransfer.co.uk