Euro to US Dollar (EUR/USD) Exchange Rate Falls on US Data

STORY LINK Euro to US Dollar (EUR/USD) Exchange Rate Falls on US Data

Euro to US Dollar (EUR/USD) Exchange Rate Falls on US Data

The Euro weakened against the US Dollar after data released by the Washington based Labour Department showed that the number of American citizens filing claims for unemployment benefits increased less than forecast last week. According to the data, the number of people filing for unemployment benefits rose by 14,000 to a seasonally adjusted level of 281,000. The four-week moving average of claims was at its lowest level since 2000. The preceding week’s claims data was also revised down to show that 1,000 fewer applications were received than previously recorded.

‘Applications stabilizing at this level are evidence of a healthy labour market. I don’t really see us going much lower than where we are now,’ said Russel Price, the senior economist at Ameriprise Financial Inc.

The better than forecast data added to the hawkish Fed minutes released in the previous session and increased speculation that the Federal Reserve will still hike interest rates in the summer. Comments made by New York Federal Reserve President William Dudley on Wednesday and by Fed governor Jerome Powell were also lending support to the view that a summer rate hike is still on the cards.
Dudley said that the timing of an interest rate hike by the US Central Bank all depends on economic data and added that a rate hike in June could still be possible if the labour market recovery remained strong. Adding to that was a speech by Mr Powell. He said that he would be willing to start tightening monetary policy despite current low levels of inflation He added that the Fed could act in June if economic data over the next two months shows that the recovery remains on track.

‘The first quarter saw a string of mixed economic data. We expect a firming labour market and still low fuel prices and interest rates to support renewed momentum in economic activity as spring takes hold,’ said the chief economist at a US based auto company. A rise in new car sales is another sign that the world’s largest economy continue to improve.

The Euro meanwhile weakened despite data showing that German Industrial production rose by 1.5% in February whist imports also increased. The report added to signs that the Eurozone’s largest economy is continuing to expand.

Against the Pound Sterling both the Euro and US Dollar advanced as the UK currency was softened by a worse than forecast UK trade deficit report.

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