EUR/USD Exchange Rate Plunges: Greece-Germany Tensions & FED Hike Speculation Weigh

Modified: Wednesday, 11 March 2015 16:32 BST - Written by Toni Johnson

STORY LINK EUR/USD Exchange Rate Plunges: Greece-Germany Tensions & FED Hike Speculation Weigh

The Euro exchange rate continued to decline closer to parity against the US Dollar as the European Central Bank’s (ECB) €1.1 trillion quantitative easing programme begins to bite in the currency markets. The EUR/USD tumbled by more than 1% to slide below the $1.06 level for the firs ttime in over 12 years.

The ECB launched its monetary easing programme at the start of the week by buying sovereign bonds with newly created money in an effort to encourage growth and tackle low inflation in the currency bloc.

‘The US Dollar and the Euro can go to parity and it can happen pretty quickly, within the next month or two. It is like being stuck in the traffic on the way to the seaside. You know you will get there, you just don’t know when,’ said Gian Marco Salcioli, from Italy’s Intesa Sanpaolo Banca IMI.

A third of the Euro’s decline has occurred since last week as the US Dollar surged higher on the back of a better than forecast jobs report which increased speculation that the US Federal Reserve will raise interest rates by the middle of the year. The single currency is on course to make its worst quarter on record.

‘In terms of the flow that we’re hearing about...it’s not panic selling of Euros. We are hearing its corporate flow, some fund flow, some speculative flow. None of it in itself is particularly outsized but it’s all going in the same direction,’ said Paul Lambert, a fund manager based in London.

Euro Under selling Pressure

As well as expectations for a Federal Reserve rate rise weighing on the Euro the currency is also coming under heavy pressure from concerns regarding the Greek situation. Tensions between Greece and Germany are rising as Athens threatened to seize German assets to compensate Greek victims of the Nazi’s occupation in World War 2. The Germans responded by dismissing the threats. A representative for the German finance ministry said there was no reason to hold talks about reparations and that the demands were a distraction from the serious financial issues facing Greece.

The US Dollar continued to advance against the Euro despite the release of data out of the US showing that the number of applications for US mortgages fell last week. According to the Mortgage Bankers Association, its seasonally adjusted index of mortgage application activity which includes both refinancing and home purchase demand fell by 1.3%.

Euro Exchange Rates Today

The Euro to Australian Dollar exchange rate is -0.41 pct lower with a conversion rate of 1 EUR equals 1.39567 AUD.
The Euro to Canadian Dollar exchange rate converts -0.43 per cent lower at 1 EUR is 1.35147 CAD.
The Euro to Swiss Franc exchange rate today is converting -0.23 per cent lower at 1.06649 EUR/CHF.
The Euro to Pound Sterling exchange rate today is converting -0.26 per cent lower at 0.70829 EUR/GBP.
The Euro to Japanese Yen conversion rate is -0.81 pct lower at 128.56592 EUR/JPY.
The Euro to New Zealand Dollar conversion rate is -0.18 pct lower at 1.46628 EUR/NZD.
The Euro to Singapore Dollar conversion rate is -1.26 pct lower at 1.46820 EUR/SGD.
The Euro to Turkish Lira exchange rate converts -2.11 per cent lower at 1 EUR is 2.76325 TRY.
The Euro to US Dollar conversion rate is -1.08 pct lower at 1.05918 EUR/USD.

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