USD Exchange Rates Forecast to Improve, EUR Struggles Predicted

August 25, 2016 - Written by Frank Davies

STORY LINK USD Exchange Rates Forecast to Improve, EUR Struggles Predicted

US Dollar (USD) Exchange Rates Boosted by US Durable Goods Data

With US data supporting the case in favour of higher US borrowing costs the US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rates rallied.

The most eye-catching data release of the day so far has been this afternoon’s US Durable Goods Orders data, published a short time ago. The monthly data set is closely-monitored by investors for clues regarding the future performance of the world’s premier economy and if today’s numbers are anything to go by, the US economy is in good shape.

July’s provisional Durable Goods Orders figure, considered a key leading indicator, printed at 4.4% when a showing of 3.4% had been anticipated by analysts. The July version of the same number was also upwardly adjusted to -4.2%, providing further grounds for encouragement.

Odds of Federal Reserve Rate Hike Could Send USD to GBP, EUR Exchange Rates Soaring

Futures markets are now pricing-in a 56.9% implied percentage likelihood that US interest rates will be edged higher by the Federal Reserve before the end of the year. The Pound Sterling US Dollar (GBP/USD) exchange rate drifted lower from its intraday high of 1.3264 GBP USD as a consequence, while the euro Dollar exchange rate held relatively steady, oscillating either side of the 1.1300 EUR USD threshold.

Euro (EUR) Exchange Rates Struggling after German IFO Data

Elsewhere, a disappointing set of Ifo Business Surveys of the euroland’s number one economy have curbed any gains for the euro (currency : EUR) on the day. The headline Ifo Business Confidence index, which canvassed the opinions of some 7,000 German companies, showed a marked decrease from July’s print of 108.3 to a disappointing 106.2. The press release from CES Ifo which accompanied the publication struck a markedly downbeat assessment of the state of Germany’s economy, noting that,

‘Business confidence in Germany has clearly worsened. The Ifo Business Climate Index fell from 108.3 points in July to 106.2 points in August. Both the current business situation and the expectations for the next six months were assessed more poorly by the companies than in the previous month. The German economy has fallen into a summer slump.’

Analysts now forecast that the shared currency is expected to perform on a neutral to negative footing moving forward and the GBP EUR exchange rate stands at 1.1692.

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