The Euro (EUR) to US Dollar (USD) Exchange Rate slipped to a fresh eight month low on Wednesday as data out of the USA smashed economist expectations and as German inflation slowed in July, highlighting the threat of deflation in the Eurozone.
The Euro to US Dollar Exchange Rate was trading at 1.338 The Euro to Pound Sterling Exchange Rate was trading at 0.791.
Early in the session the Euro received some positive news after data showed that Spain’s economy expanded at a faster than expected rate in the second quarter of the year.
That was countered however by a separate report showing that consumer prices fell unexpectedly.
According to data released by the German Federal Statistics Bureau, consumer price inflation in the Eurozone’s largest economy accelerated at an annualised rate of 0.8% in July, the figure was down from the previous figure of 1% and largely matched economist forecasts.
On a month-on-month basis inflation improved better than expected as it increased to 0.3%. The figure beat forecasts for an increase of 0.2%.
The data had little impacted upon the Euro as investors were eagerly waiting the latest reports from the United States.
Prior to the GDP data release came the latest jobs data compiled by ADP.
The report showed that US companies created 218,000 new jobs this month and was the fourth consecutive month to show job growth above the 200,000 mark.
Despite that the number was below forecasts for 281,000.
The markets shrugged off that report as the Commerce Department published its latest GDP data.
According to the department, the US economy expanded by 4% at an annual rate as activity picked up broadly across the board.
Annual revisions also released on Wednesday show the economy grew by 4% in the second half of 2013, its fastest pace of growth in a decade.
The data shows that the US economy has recovered strongly from the ill effects of the extremely cold winter.
“The bottom line for today’s report is that it validates the ‘one off’ thesis pertaining to Q1 and as such, we hold to our current view that the economy will expand by 3.0% or so in the back half of the year, interest rates should drift higher and the Federal Reserve will feel vindicated in exiting the asset purchase program,” Dan Greenhaus, chief strategist at broker BTIG wrote in a note to investors.
Euro to US Dollar Exchange Rate Forecast
The Euro could fall further on Thursday if a string of key reports out of the Eurozone disappoint.
Germany is due to publish retail sales and unemployment data whilst the wider region is expected to release inflation data.
A poor inflation figure will raise pressure upon the European Central Bank to introduce new measures in order to stave off the threat of deflation and will highlight the diverging polices of the ECB to those of its major peers such as the Bank of England and Federal Reserve.
Investors will also be keeping an eye on the latest US jobless claims data on Thursday and nonfarm payrolls reports on Friday.
If they come in strongly then speculation for a Federal Reserve rate rise will increase and bolster the ‘Greenback’ further.
UPDATED 09:55 GMT 31 July, 2014
EUR/USD Steady before CPI
The Euro to US Dollar exchange rate held declines overnight but managed to edge slightly higher following the publication of German Retail Sales and Employment figures.
The German Retail Sales data detailed a much stronger than expected month-on-month gain of 1.3% while the level of German unemployment declined for the first time in several months.
However, while this was good news for the Eurozone’s largest economy, Euro gains were stilted prior to the publication of the Eurozone’s Consumer Price Index.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.3390.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3375 ,
Euro,, Pound Sterling,0.7907 ,
Euro,,Australian Dollar,1.4304 ,
Euro,,Canadian Dollar,1.4555 ,
Pound Sterling,,Euro,1.2634 ,
US Dollar,,Euro,0.7478 ,
[/table]
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