The Euro US Dollar exchange rate saw a moderate drop during Tuesday’s trading session, ahead of a potentially tumultuous pair of Eurozone votes.
Euro Demand Softened on Mixed Confidence Stats
The Euro failed to rise against the US Dollar during trading on November 29th, mainly due to a poor outcome from the morning’s Eurozone confidence and sentiment results for November.
Business confidence fell during the month, as did industrial sentiment. Services sentiment remained static, while a minor rise was recorded for the economic sentiment score. Overall, better results had been expected, which was part of the cause behind investor disappointment in the outcomes.
On the other side, the US Dollar found itself in high demand over the course of the day, mainly due to an earlier Dallas Fed manufacturing index result exceeding forecasts.
High Euro Exchange Rate Turbulence Possible on EU Voting Aftermath
The next major events likely to cause Euro movement will come from Italy and Austria; both countries are holding important votes on December 4th.
In Italy’s case, the constitutional referendum is more broadly linked to Prime Minister Matteo Renzi’s chances to remain in office; Renzi has previously pledged to resign if the ‘No’ vote is in the majority.
The reforms outlined in the vote are designed to make it easier for the government to implement legislation by reducing the number and make-up of the Italian senate, but Renzi’s low approval rating and the threat of a more right-aligned party taking over have raised the stakes of a relatively simple referendum considerably.
In Austria, a Presidential clash between Europhiles and Eurosceptics is underway, with Alexander Van der Bellen representing attitudes of EU unity and far-right candidate Norbert Hofer looking to pull away from closer EU union.
A ‘Yes’ referendum vote and victory for Van der Bellen are both expected to boost Euro demand considerably, while if Italy votes ‘No’ and Hofer gains power, then the Euro is set to plummet.
US Dollar Outlook Expected to Cloud if Voting Recount Favours Democrats
For the US Dollar, demand in the future may be determined by the result of ongoing efforts to recount the 2016 US Presidential Election votes.
The recounts are being held to determine whether any electoral fraud has taken place, or whether votes have been miscounted. While only a few states are targeted by this recount, the outcome could result in the Democrat Party gaining more Electoral College votes than previously recorded.
While it remains to be seen if this would tip the scales and see Trump reported as the loser, any sign of false voting is likely to weaken the US Dollar considerably, as it would point towards high political and economic turbulence in the country.
Recent Interbank Exchange Rates
At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.06 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94.
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