While the Euro began the local session in a stronger position against a floundering Australian Dollar, the common currency was slightly weaker against the Pound and ‘Greenback’.
Although yesterday’s consumer confidence figures for the US fell short of economist forecasts, the belief that the Fed will continue with the steady tapering of stimulus prevented the Euro making any notable gains.
However, the European asset went on to advance on its US peer as the GfK German consumer confidence survey surprised to the upside.
The report showed that the gauge of consumer sentiment is forecast to achieve a seven-year high of 8.5 in March, up from a positively revised 8.3 in February.
Economists had expected today’s report to show a reading of 8.2.
In response to the report economist Christian Schulz noted; ‘High job security and rising incomes as well as very low inflation have been boosting consumer confidence to record highs lately and should translate into stronger household spending growth in 2014.’
This report follows Monday’s upbeat business confidence report for Germany.
Despite this positive news the Euro held onto declines against the Pound this morning as separate data revealed UK economic expansion of 0.7 per cent in the fourth quarter.
Growth was down slightly from the 0.8 per cent recorded in the third quarter but still implied that the UK’s economic recovery continued at the close of the year.
Sterling was barely affected by the news and continued to derive underlying support from the expectation that the Bank of England will raise interest rates in the first quarter of next year.
The EUR/GBP exchange rate was also trending lower after the European Commission stated yesterday that the Eurozone will underperform rival economies in the short term. The Commission indicated that the region’s economic performance will fail to match that of the UK, China and US.
Additional Euro movement is likely to be limited today due to a lack of further economic news for the 18 nation currency bloc, and we forecast that the EUR/GBP exchange rate will stay weaker as European trading progresses.
However, Euro volatility can be expected tomorrow as several high-profile reports are published.
As well as German unemployment figures, investors will be focusing on Eurozone industrial/economic/services confidence data and Germany’s consumer price index.
Before the end of the week the Euro may experience more fluctuations as a result of German retail sales and Eurozone inflation reports.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8236,
Euro,,US Dollar,1.3747,
Euro,,Canadian Dollar,1.5224,
Euro,,Australian Dollar,1.5245,
Euro,,New Zealand Dollar,1.6474 ,
US Dollar,,Euro ,0.7271,
Pound Sterling,,Euro,1.2138,
Canadian Dollar,,Euro,0.6569 ,
Australian Dollar,,Euro,0.6555 ,
New Zealand Dollar,,Euro,0.6061 ,
[/table]
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