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Euro to Dollar Exchange Rate Shoots Up as Fed?s Bostic Predicts Only One US Interest Rate Hike

January 9, 2019 - Written by John Cameron

The Euro to US Dollar (EUR/USD) exchange rate is up today at over 0.6% and is currently trading within the region of $1.1529.

The Euro (EUR) shot up against the US Dollar (USD) despite the release of Germany’s disappointing trade figures, with exports for November falling -0.4% against October’s 0.9% rise.

However these losses were absorbed by the publication of Germany’s trade balance, which increased above forecast today to €19.0bn, from October’s €17.9bn.

Carsten Brzeski, the Chief Economist at ING, commented:

‘For the German economy, today’s trade data do very little to take away the fears of a technical recession. . . Still, private consumption, government expenditures and investments could prevent the economy from falling into a technical recession.’

These losses were further buffered slightly by the release of today’s Eurozone unemployment rate figures for November which decreased above expectations to 7.9% – its lowest since 2008 –stabilising the Euro to US Dollar exchange rate.

However, the US Dollar weakened significantly after Raphael Bostic, the CEO of the Federal Reserve, commented that the central bank may only raise interest rates once in 2019, further dampening investor appetite for the US Dollar.

USD failed to make any gains on the Euro after US President Donald Trump delivered a TV address last night calling for funding for the Mexican border wall project, with positions from both the US government and the House of Representatives remaining entrenched.

Continuing trade talks between the US and China have had relatively little effect on USD, with Karen Ward, a Chief Market Strategist at JP Morgan, saying:

‘I think [the deal] would have to be extremely far-reaching for the markets to breathe an enormous sigh of relief. . . I don’t think, unfortunately, that (the trade war) is something that will disappear from our horizon for the full year.’

EUR/USD Exchange Rate Strengthens as UK MPs Rally against Brexit ‘No-Deal’

The Euro is becoming increasingly sensitive to the UK’s Brexit news, with British MPs returning to Parliament today to continue debates over Prime Minister Theresa May’s deal.

Euro investors are currently assessing the Brexit situation, with MPs increasingly pushing to prevent a chaotic Brexit scenario.

This comes following today’s news that an amendment by Conservative MP Dominic Grieve has been passed by the Speaker at the House of Commons, John Bercow, which forces Theresa May to enact a ‘Plan B’ option if her current UK-EU withdrawal deal is rejected.

EUR/USD Forecast: Dovish Comments from Powell Could Further Strengthen Euro

EUR investors will be looking ahead to tomorrows’ release of the European Central Bank’s monetary meeting account reports, with any signs of bullishness further bolstering the single currency against the ‘Greenback’.

As the UK’s Brexit wrangles heat up, EUR investors will be paying close attention to developments in Parliament, assessing the likelihood that the UK will leave the EU without a deal.

USD investors, however, will be looking ahead to tomorrow’s release of the US continuing jobless claims figures for December, which are expected to decrease, potentially allowing the ‘Greenback’ reclaim some of its losses.

Tomorrow will also see Jerome Powell, the Chair of the Federal Reserve, deliver a speech, with any more dovish comments potentially further strengthening the EUR/USD exchange rate.

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