The Euro has struggled to make any noticeable gains on Friday despite relatively positive economic data results. This is likely to be attributed to the poor response to the European Central Bank’s longer-term refinancing operations, or TLTRO. Despite a lack of domestic data the US Dollar has made gradual gains over the course of Friday which is likely to be attributed to trader risk aversion.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2857.
Those invested in the Euro have had a difficult time of late in the period following the dramatic rate reduction and stimulus initiative introduced by the European Central Bank. A succession of negative data publications has aided the single currency’s downtrend.
Wednesday saw the Euro regain a little momentum after European domestic data printed positively. The data showed that inflation had improved fractionally with the Consumer Price Index rising from 0.3% to 0.4%, but this is still well below the ECB’s target of just under 2.0%.
Thursday, however, saw all those small gains diminish after the European Central Bank’s TLTRO allotments failed to have the desired effect. The central bank announced that Eurozone lenders only borrowed €82.6 billion which is well below the forecast €100-150 billion. BNP Paribas described this as ‘dealing a blow’ to the ECB because it looks as if there will need to be yet more stimuli to counteract the dissolving economy.
Alberto Gallo, head of macro credit research at RBS stated; ‘This take-up is not great, although we expect it to bounce back with around another €120-170 billion taken in the second TLTRO in December. But the real question remains unanswered: will the banks use these cheap funds to lend to the real economy? We won’t know the answer to that for several quarters, but we have some doubts…. In any case, the ECB’s new easing program is in our view not enough to offset the potential spillovers as the Fed gets more hawkish’.
Thursday’s US labour market data printed reasonably positively which helped the ‘Buck’ claw back some of the losses from the dovish Federal Reserve monetary policy outlook. Both continuing claims and initial jobless claims showed a positive declination.
The Euro to US Dollar exchange rate has hit a low today of 1.2843.
On Friday the Euro to US Dollar exchange rate hit a monthly low despite European data printing in line with the market consensus. This is likely due to the negative sentiment following the issues with TLTRO allotment described above.
German Producer Prices stayed in line with the previous figure of -0.8%, and both the non-seasonally adjusted and the seasonally adjusted Eurozone current account data publications improved upon the previous score.
With only one solitary economic data publication pertaining to the US on Friday the US Dollar gains have been relatively slow and steady. These gains are likely to be due to trader risk aversion from commodity-correlated currencies.
The Euro to US Dollar exchange rate has reached a high today of 1.2843.
