Euro Exchange Rate News Index

A look at the spot markets shows the euro dollar exchange rate 0.18 pct higher at 1.2863. The euro pound exchange rate is flat at 0.8461.

[NB: The above quotes are taken from the interbank markets - your bank will affix a discretionary spread to the retail rate they offer. However, an independent provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.]

We hear from a number of currency market commentators on the outlook for the euro in the week starting 20 May

ANZ Research say:

Comments from ECB officials on Friday night suggest that the risk to policy rates in the euro zone remains to the downside. Yves Mersch commented that 'all options are available' and that a negative ECB deposit rate is a 'possibility'. His colleague Joerg Asmussen said that while the persistent historic lows in interest rates could lead to a misallocation of resources, monetary policy will stay accommodative for as long as proves necessary.

"Asmussen’s comments certainly imply that he is well aware of the risk that current ECB policy could cause new bubbles to emerge. This may, at the margin, help to check talk of a negative deposit rate."


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Yuki Sakasai at Barclays says:

"EUR/USD has been trading broadly in line with German-US interest rate spreads. With Euro Area (EA) Q1 GDP surprising to the downside, the market is likely to pay close attention to forward-looking indicators such as flash PMIs and German IFO.

"We expect EA manufacturing PMI of 47.1 (cf. 47.0) and service PMI of 47.2 (cf. 47.2) on Thursday and German IFO of 105.0 (cf. 104.4) on Friday; if we are correct, these would likely be EUR supportive. The EU summit on Wednesday will discuss energy, tax and the work on the deepening of EMU ahead of the June meeting, but is unlikely to have much effect on the market."

Aurelija Augulyte at Nordea Markets says:

"It doesn’t matter that the ECB won’t cut deposit rates. What matters is the fear that they will do it soon as the economic data worsens. But if monetary and financial data is anything to go by, we may see some improvement in PMIs this week. And we will probably hit another surplus month in the EMU current account, in excess of EUR 15bn.

US dollar exchange rate outlook

The US dollar is forecast to find further support should US economic releases surprise to the upside. Sakasai says:

"Given the market attention on the US economic/monetary policy outlook, Chairman Bernanke’s testimony in the Congress and the FOMC Minutes (both on Wednesday) will likely be the focus from the US.

"We expect Bernanke to confirm the Fed’s accommodative policy stance, while not explicitly mentioning the timing of tapering asset purchases, reiterating that it is prepared to increase or reduce the size of purchases, depending on the incoming data. On the other hand, we think there is a risk that the minutes may paint a more hawkish tone, as in previous versions.

"In terms of economic data, new home sales (Thr) and durable goods (Fri) are scheduled, and we do not expect major surprises, looking for new home sales of 426k (cf. 425K) and durable goods ex-transportation of 0.5% m/m (cf. 0.5%)."