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Euro to US Dollar Exchange Rate Firms as US Data Disappoints Yet Again

April 23, 2015 - Written by Toni Johnson

Euro to US Dollar Firms as US Data Disappoints Yet Again



The Euro made gains against the US Dollar as economic data out of the world’s largest economy came in worse than forecast to cause investors to raise their bets that the Federal Reserve will not raise interest rates in the summer and increased their bets that a rate rise may now not occur until 2016.

Earlier in the session, the single currency had come under pressure from the release of softer than forecast PMI data from France, Germany and the wider Eurozone. The Eurozone’s composite index, which combines the services and industrial sectors, fell from 54 to 53.5. Economists had been expecting the PMI to rise to 54.4. In a PMI, any figure above 50 indicates expansion whilst a number below 50 indicates contraction.

‘The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledgling recovery seen at the start of the year. However, it’s too easy to draw firm conclusions about whether growth is faltering again and the effectiveness of policy. Although the PMI has pulled back from March’s recent high, the index remains above the average seen in the first quarter and is indicative of the Eurozone economy growing at a reasonably robust quarterly rate of 0.4% at the start of the second quarter,’ said Chris Williamson, chief economist at Markit economics.


Unemployment in Spain was also shown to have increased to 23.7%. Economists had been forecasting for a dip to 23.1%.

As the session progressed, the US Dollar weakened as data showed that the number of Americans filing for unemployment benefits ticked unexpectedly higher last week and as Markit’s Flash Manufacturing PMI came in below expectations. The biggest drag on the ‘Greenback’ however was a report, which showed that the number of new home sales collapsed in March.

According to the Washington based Commerce Department, new home sales fell by 11.4% last month to a seasonally adjusted annual rate of 481,000. The figure marked a sharp drop from the preceding month’s seven-year high of 543,000. March’s decline was the biggest drop recorded since July 203.

The Euro also regained ground against the Pound Sterling after data showed that UK retail sales fell by -0.5% last month. The fall disappointed expectations for a rise of 0.4%. On an annual basis retail sales rose by 4.2% in March, below forecasts for a gain of 5.4%.

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