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EUR USD Exchange Rate Rallies as Eurozone GDP Impresses
Published: 30 Jan at 3 PM Tags: Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Forex, Canadian Dollar Exchange Rate, Euro Crisis, Yen Exchange Rate, UK, Exchange Rates, Economy, Inflation,
The EUR/USD exchange rate rallied hard during the European session of Tuesday as markets reacted to the Eurozone’s latest GDP figures.
<h2>Euro (EUR) Bolstered by Upbeat GDP Figures</h2>
The Euro made strong gains in early trading this morning as the Eurozone publishes its preliminary GDP reading for the fourth quarter.
According to data published by European statistics agency, Eurostat, the Eurozone economy expanded by a healthy 0.6% in the last three months of 2017.
While this was down from an upwardly revised 0.7% in the third quarter, it still helped the bloc to cap off its best year of growth in a decade as annualised growth struck 2.7% last year.
Mostly importantly this also puts growth in the Eurozone ahead of most other major economies last year.
Barret Kupelian, senior economist at PwC said;
‘The good news keeps on coming from the Eurozone, which grew at a quarterly rate of 0.6% in the last quarter of 2017. Even though this is slightly slower than the previous quarter, the fuller picture for 2017 is overwhelmingly positive, with growth in the Eurozone ahead of the UK, US and Japan.’
On top of this economists are also optimistic that this uptrend will continue into 2018 as well, aided by the European Central Bank’s (ECB) accommodative monetary policy.
Kupelian adds;
‘In our main scenario projection, we expect the Eurozone to grow by at least 2% [in 2018], marking its strongest two-year streak since the global financial crisis.’
<h2>US Dollar (USD) Muted ahead of Trump Speech</h2>
The US Dollar is seeing limited movement today as markets await President Trump’s first state of the Union address later this evening.
Some of the key issues likely to be tackled in today’s address are Trump’s plans on trade, immigration and infrastructure spending, which could all have an impact on USD.
However it is the possibility that Trump may choose to talk up the US Dollar that may have the biggest impact on currency markets.
USD came under considerable pressure last week as the US Treasury secretary Steve Mnuchin sang the praises of a weaker US Dollar, however Trump contradicted him later in the week by say he desired a strong currency.
A repeat of such remarks could provide a major boost for the US Dollar and help it claw back some of its recent losses against the Euro.
<h2>EUR/USD Exchange Rate Forecast: Fed Expected to Leave Interest Rates on Hold</h2>
Looking ahead movement in the EUR/USD exchange rate tomorrow is likely to be driven by central bank speculation as the Federal Reserve holds its first policy meeting of the year.
While the Fed is not expected to make any alterations its monetary policy, investors will be closely watching the language used by the bank to determine whether recent suggestions that it may have underestimated the impact of Republican tax cuts could lead to a more hawkish outlook this year.
Meanwhile the Euro may slip tomorrow morning if the Eurozone’s latest CPI figures reveal that headline inflation slipped from 1.4% to 1.3% this month as forecast.
<h2>Euro (EUR) Bolstered by Upbeat GDP Figures</h2>
The Euro made strong gains in early trading this morning as the Eurozone publishes its preliminary GDP reading for the fourth quarter.
According to data published by European statistics agency, Eurostat, the Eurozone economy expanded by a healthy 0.6% in the last three months of 2017.
While this was down from an upwardly revised 0.7% in the third quarter, it still helped the bloc to cap off its best year of growth in a decade as annualised growth struck 2.7% last year.
Mostly importantly this also puts growth in the Eurozone ahead of most other major economies last year.
Barret Kupelian, senior economist at PwC said;
‘The good news keeps on coming from the Eurozone, which grew at a quarterly rate of 0.6% in the last quarter of 2017. Even though this is slightly slower than the previous quarter, the fuller picture for 2017 is overwhelmingly positive, with growth in the Eurozone ahead of the UK, US and Japan.’
On top of this economists are also optimistic that this uptrend will continue into 2018 as well, aided by the European Central Bank’s (ECB) accommodative monetary policy.
Kupelian adds;
‘In our main scenario projection, we expect the Eurozone to grow by at least 2% [in 2018], marking its strongest two-year streak since the global financial crisis.’
<h2>US Dollar (USD) Muted ahead of Trump Speech</h2>
The US Dollar is seeing limited movement today as markets await President Trump’s first state of the Union address later this evening.
Some of the key issues likely to be tackled in today’s address are Trump’s plans on trade, immigration and infrastructure spending, which could all have an impact on USD.
However it is the possibility that Trump may choose to talk up the US Dollar that may have the biggest impact on currency markets.
USD came under considerable pressure last week as the US Treasury secretary Steve Mnuchin sang the praises of a weaker US Dollar, however Trump contradicted him later in the week by say he desired a strong currency.
A repeat of such remarks could provide a major boost for the US Dollar and help it claw back some of its recent losses against the Euro.
<h2>EUR/USD Exchange Rate Forecast: Fed Expected to Leave Interest Rates on Hold</h2>
Looking ahead movement in the EUR/USD exchange rate tomorrow is likely to be driven by central bank speculation as the Federal Reserve holds its first policy meeting of the year.
While the Fed is not expected to make any alterations its monetary policy, investors will be closely watching the language used by the bank to determine whether recent suggestions that it may have underestimated the impact of Republican tax cuts could lead to a more hawkish outlook this year.
Meanwhile the Euro may slip tomorrow morning if the Eurozone’s latest CPI figures reveal that headline inflation slipped from 1.4% to 1.3% this month as forecast.
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Source: moneytransfer.co.uk