After Germany’s Factory Orders report showed a concerning decline on Monday, the Euro to Pound (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates fluctuated. Although the common currency held its own against the Pound, it softened against the US Dollar.
The Euro came under additional pressure on Tuesday as another German report fell short of forecasts.
In recent weeks concerns regarding the performance of the Eurozone’s largest economy have grown. Throughout the financial crisis, Germany has been the powerhouse keeping the Eurozone’s head just above water, but the nation seems to be losing its grip.
It had been expected that the pace of industrial production in Germany would decline by -1.5% in August on a month-on-month basis but it actually plummeted by -4.0% following a negatively revised increase of 1.6% in July.
On the year, German Industrial Production fell by -2.8%, far steeper than the -0.5% annual slump priced in to the market.
After the report was published the Euro softened across the board, losing 0.2% against the US Dollar and Pound and falling by 0.35% against the Australian Dollar.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a high of 0.7868
Although some industry experts believe that the strength of the German employment sector and encouraging levels of domestic demand should help the nation avoid sliding into recession, the results are certainly concerning.
After publishing the industrial production figures the German economics ministry asserted; ‘Industrial production is currently going through a weak phase… but the current decline is exacerbated by holiday effects. Altogether, weak production should be expected for the third quarter as whole.’
The EUR/USD pairing hit a low of 1.2604
Similarly, economist Andreas Rees noted; ‘German industrial activity will soften in coming months as already indicated by business sentiment but not tumble into the abyss. And no, there is no reason to dig up the R-word again. To a large extent, today’s setback is a technical one which was not driven by a sudden deterioration in fundamentals. This can best be seen by looking at the massive drop in the auto sector.’
The Euro to Pound exchange rate held losses after the UK’s Manufacturing/Industrial Production figures confirmed a slowing in the monthly pace of output.
EUR/GBP, EUR/USD Exchange Rate Forecast
Before the close of the European session the Euro to US Dollar exchange rate could fluctuate modestly in response to US Consumer Credit figures.
Tomorrow the British Retail Consortium’s Shop Price Index may inspire further movement in the EUR/GBP exchange rate, but otherwise there is a decided lack of economic news for Europe.
Volatility in the EUR/USD exchange rate may be triggered by the US MBA Mortgage Applications figures, the commentary of current and former Federal Reserve officials and the publication of the minutes from the Federal Open Market Committee’s recent policy meeting.
A hawkish set of minutes could push the Euro lower against the US Dollar.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7850
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2735
UPDATE
The Euro to Pound exchange rate is currently trending in the region of 0.7875.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2648.
With a complete absence of European data on Wednesday the Euro is experiencing fluctuation against many of its most traded currency rivals. It is possible that the Euro will continue to fluctuate against higher-yielding currencies as traders await the European Central Bank mopnthly report due for publication on Thursday.
Sterling is also volatile on Wednesday morning after mixed data results. The Shop Price Index declined from -1.6% to -1.8%. House prices, however, increased beyond the market consensus in September having grown by 0.6%.
The US Dollar has softened a little against most high-yielding currencies after Tuesday’s consumer credit score declined far beyond expectations.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7850,
Euro,,US Dollar,1.2631,
Euro,,Canadian Dollar,1.4083,
Euro,,Australian Dollar,1.4363,
Euro,,New Zealand Dollar,1.6103,
US Dollar,,Euro ,0.7916,
Pound Sterling,,Euro,1.2740,
Canadian Dollar,,Euro,0.7100,
Australian Dollar,,Euro,0.6961,
New Zealand Dollar,,Euro,0.6209,
[/table]
