Euro on the Up against the US Dollar
Following startling comments from the US-Euro ambassador, Prof. Ted Malloch, in the week ending 28 January, many financial forecasters expected the Euro to drop against the US dollar. However, this did not materialize. In fact, the Euro currency has been on the uptrend against the US dollar. From a dip of 1.066, it has risen to 1.07 against the dollar. Although the EUR/USD has been on the rise for the past six weeks, it is still showing signs of susceptibility and the remarks by Prof. Malloch have not helped the situation.
Prof. Ted Malloch had sensationally claimed that the European Union would collapse in the coming months, further giving a timeline of 18 months. A collapse of the European Union means the Euro currency will become obsolete. The ambassador, alongside US president, Donald Trump, both have been quite vocal about their support for Brexit, and their reservations on the Euro. Mr. Trump, in particular, is not a supporter of the European Union and he even suggested that more countries would follow Britain out of the Euro.
Impact of the Eurozone Economic Confidence on EUR/USD
The Eurozone survey seeks to establish consumer confidence, as an indicator for economic activities in European Union countries. The survey indicates the status of the Eurozone economy. Financial analysts and enthusiasts are keen on what would be the outcome of the Eurozone Economic confidence survey, slated for today, 30 January 2017. The results are out! The Eurozone Economic Confidence has hit an all time high in nearly 6 years. Additionally, for the fifth month in a row, the Eurozone economic confidence has been on the uptrend. This is a strong indicator that the Euro has entered 2017 on a strong footing, despite negative remarks from skeptics.
The confidence index saw a steady rise to 108.2 in January 2017 from 107.8 the previous month. This was the highest index since March 2011 when it was 108.3. However, retail trade and construction confidence had witnessed a slight decline, but a rise in consumer confidence and improvements in industry services has countered the decline, nonetheless. Furthermore, projections indicate that the EU GDP will rise by 0.4% and analysts are waiting with baited breath for Eurostat to publish GDP data, come 31 January 2017.
The Eurozone Economic confidence results mean that the EUR/USD is set to move higher than earlier projected. In the coming days, financial experts suggest that we are set to witness higher margins of more than 1.08. An economist from IHS Markit, Mr. Howard Archer says the just released results are good news for the EU economy and the Euro currency. However, he warns that business and consumer confidence could experience external pressure from political uncertainties, further having a negative impact on the growth of the Euro.
Britain has already initiated discussions in parliament for Brexit. On the other hand, Donald Trump suggested that more countries would leave the EU bloc in a meeting with British PM, Theresa May. Such uncertainties might affect the EUR/USD but no matter the outcome, the Euro has started 2017 on a very strong footing, putting in mind the Eurozone Economic Confidence report.