Although Italian political concerns weighed on the Euro as the week opened, the common currency has posted a notable advance against its US counterpart as a result of developments both at home and abroad.
The Euro to US Dollar Exchange Rate is currently trading in the region of 1.3540 as of 11:45 GMT
With budget disagreements causing widening federal factions, the US government shut down and the likelihood of the Federal Reserve tapering stimulus in the months ahead declined.
Consequently, the US Dollar plummeted against several of its most traded rivals and began the European session locked in a bearish relationship with the Euro.
While the EUR/USD pairing fluctuated after German unemployment rose unexpectedly, and German manufacturing failed to expand to the extent expected, positive employment data for the Eurozone later helped the Euro extend gains on the ‘Greenback’.
The EUR/USD Exchange Rate hit a low of 1.3515
After hitting a record high level of 12.1 per cent in June, the jobless rate in the 17 nation currency bloc eased to 12 per cent in July and held at that level the following month.
As economists were expecting the unemployment rate to come in at 12.1 per cent this was a pleasant surprise.
According to economist Ben May; ‘Since the labour market tends to react to changes in economic conditions with a bit of a lag, the health of the employment outlook may continue to improve over the coming months.’
The Euro was also supported by the news that the Eurozone’s manufacturing PMI remained at 51.1 in September, above the 50 mark separating growth from contraction and in line with economists’ expectations.
The result was accompanied by the following statement from Markit economist Chris Williamson; ‘Even manufacturers in the region’s ‘periphery’ are reporting better demand for their goods […] This is good news for the Eurozone but also for the global economy. The downturn in demand caused by the region’s recession and the uncertainty generated by its debt crisis has cast a shadow over economic recoveries across the globe’.
However, while much of Williamson’s statement was positive in tone he did add; ‘But we must not get too carried away. Although signalling the best performance for over two years in recent months, the PMI slipped slightly compared with August and remains only just above the 50 ‘no change’ level, indicating that this is still early days in what looks like a fragile recovery.’
The tempestuous nature of the Eurozone’s return to growth was highlighted by the less-than-impressive German unemployment data, which revealed a shocking 25,000 increase in the nation’s jobless. Economists were expecting a decline of 5,000.
While the increase in the Eurozone’s largest economy’s adjusted jobless rate, to 6.9 per cent from 6.8 per cent, is far from good news, according to one London-based analyst; ‘we wouldn’t see it as a sign that the German labour market has started to deteriorate. We rule out that the resilience of the German labour market will be affected now that the economy is actually gradually recovering.’
The EUR/GBP pairing fluctuated as UK manufacturing PMI expanded by less-than-forecast.
While today’s US ISM manufacturing data could trigger further EUR/USD movement, the ongoing federal shutdown is likely to be the main cause of market movement in the hours ahead.
That being said, investors will also be looking ahead to tomorrow’s European Central Bank rate decision.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3540 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8341 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4377 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6278 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7384 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1991 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6945 >
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6130 <
(Correct as of 11:45 GMT)
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