Euro shies away from slackening euro-area figures

Posted 04 February, 2019

The euro has posted some weakening at the start of the week. According to the daily statistics, the euro-to-US dollar exchange rate stands below $1.1450 at some $1.1433, with no short term upward sentiments to be seen.

According to the market analysts, the current rate fluctuations are mostly related to US dollar slackening. The greenback somewhat recovered after the Friday's drop on the uncertain labour market figures. At the same time, the euro still ignores the economic reports in the euro-area that are far from perfect.

It was reported last week, the euro-area GDP kept slowing down. Italy, in its turn, experiences technical recession given economic slackening for the second quarter in a row. According to the recent reports, the euro-area definitely has problems. Sentix sentiment index kept weakening to -3.7 (forecast – -1.3; previous rate – -1.5). 

Producer prices in Europe collapsed by 0.8% m-o-m following 0.3% a month before. The year-to-date figures dropped from 4.0% to 3.0%. The inflation pressure stays low in the region, which does not surprise anybody.

In the current situation, the euro is on the spot, as it refrains from accepting already notable slackening in the region and still expects ECB's upward rate revision. As a result, the currency can eventually face so-called accumulated impact, which may entail much bigger damage.

For now, the upward attempts of the euro-to-US dollar rate are limited at the 1.15 handle, while the break of 1.14 is getting more real.

Previous forecast

05 February, 2019 16:57

← US Federal Reserve soft position – right or wrong move?

Last week was marked by a softer position of the US Federal Reserve towards the monetary policy, which actually supported the stock markets. The US Central Bank changed its strategy dramatically this January against the December meeting. For now, the US Federal Reserve officials stick to somewhat softer policy. In fact, the Central Bank is no longer states about the possible two-fold increase this year. Still, the changes can be made at any time. At the same time, the US Federal Reserve will have no other choice but to resume monetary tightening if the economic situation in the country remains strong.

US Federal Reserve soft position – right or wrong move?

Next forecast

04 February, 2019 15:36

Drilling slowdown in USA may push oil price up →

Brent oil prices were on the rise last week posting the strengthening for the fourth week but still failed to break the $63/bbl handle. This level has been scaring off buyers since the beginning of the year. In short run, the market players are likely to keep studying the potential impact of US sanctions on the supply-demand balance, the sentiment of global investors in the stock markets as well as the future dynamics of US oil and petroleum prices. In particular, the $63 handle will be in the spotlight, as its break can lead to further resistance near the $64 handle.

Drilling slowdown in USA may push oil price up
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