With the eagerly anticipated Federal Reserve interest rate decision fast approaching ‘Fiber’ has been subject to changeability as it spikes within a narrow range. This is as the result of a combination of trader reluctance to invest heavily in ‘Greenback’ (USD) and European economic data failing to meet with the market consensus.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2946.
The well documented demise of the Euro has not abated as yet. Since the European Central Bank elected to loosen its stance on monetary policy the single currency has struggled to make any significant, sustained gains. The dominance of the Scottish bid for independence on trader focus has served to compound the Euro’s dampened demand, and the general poor economic data hasn’t tempted traders back.
In complete contrast the US Dollar has finally shaken off the shackles of quantitative easing; making sustained bullish runs and topping the currency market charts. This can be attributed to heightened speculation that the Federal Reserve will toughen their stance on monetary policy and hike interest rates.
The Euro to US Dollar exchange rate has hit a low today of 1.2920.
Tuesday’s European economic data has left a lot to be desired for those invested in the single currency. It is perhaps unsurprising that the German ZEW Survey for Economic Sentiment dropped from the previous figure, especially given the recent succession of poor data publications from the currency bloc’s most powerful nation. The survey indicated a massive decline from 8.6 to 6.9. It is probably equally predictable that the Eurozone survey for economic sentiment failed to gain on the previous score, however, the extent of the declination is far more shocking having fallen from 23.7 to 14.2.
With the market consensus expecting the German ZEW Survey for the Current Situation to cool from 44.3 to 40; the actual data revealed a disappointing reduction to just 25.4.
As traders await Wednesday’s Federal Reserve policy meeting demand for the ‘Buck’ (USD) has dampened gradually. This is in spite of the results from the US economic data published thus far on Tuesday; with each separate report meeting with the market forecast.
The Net Long-term TIC Flows data, due for publication later on Tuesday night, may have the potential to spark Dollar movement; although it is still unlikely to register massively with such important economic data around the corner. The data will, however, give valuable insight into foreign demand for the ‘Buck’ and American investments. Usually, a strong government holding of Dollar denominated assets signals growing ‘Greenback’ optimism as it shows that governments are confident in the stability of the U.S. Dollar. If this proves to be the case it may help towards the Federal Reserve’s crucial decisions on the direction of their monetary policy.
The Euro to US Dollar exchange rate has reached a high of 1.2967.
UPDATE
The Euro to US Dollar exchange rate is currently trending in the region of 1.2964.
Wednesday’s American economic docket is teaming with important, influential domestic data publications. Despite this data feast it is highly likely that the US Dollar will soften during the European session as traders await the Federal Reserve decision on interest rates.
With trader focus dominated by British and American economic events it is unlikely that the Euro will experience any major volatility, even if the European domestic data provides surprising results. However, the single currency will experience changes if the Bank of England minutes provide unforeseen information, or if the Federal Reserve chooses a dovish monetary policy outlook.
