Euro to US Dollar (EUR/USD) Exchange Rate at a Three-Month Low
Frankfurt (May 23) The Euro slipped to a new three month low against the US Dollar on Friday after data showed that business confidence in Germany fell and as Europe’s citizens take to the polls.
The single currency is now on course to make its third consecutive weekly low against the US Dollar as concern builds that anti-EU parties are set to gain ground in the elections for the European Parliament.
Votes counted in the UK show that the Euro-sceptic United Kingdom Independence Party (UKIP) party is set to win the vote and has taken a sizeable chunk of the local election vote as well.
Signs from the Netherlands however show that support for the right-wing party led by Geert Wilders lessened.
According to the Ifo institute, its German business climate index declined from 110.4 in May from the 111.2 recorded in April.
Economists were expecting a figure of 110.9.
“The Ifo survey is the trigger for more Euro weakness today. The worry now is that momentum is waning in the core and that strengthens the case for the ECB to move in June. There is some nervousness around the European election results too,” said the head of foreign exchange strategy at Saxo Bank.
Also weighing on the Euro was the release of data yesterday which showed that manufacturing across the 18-member Eurozone fell at its fastest pace in almost three years.
Today’s negative German data and the weaker than forecast manufacturing report released yesterday caused investors to increase their bets that the European Central Bank will introduce new monetary easing measures at next month’s policy meeting.
Another report published today showed that retail sales in Italy fell more than forecast in March. Sales slipped to -3.5% year-on-year and by -0.2% month-on-month.
The US Dollar meanwhile is likely to make further gains later in the session if the latest new home sales data comes in as forecast.
The Euro is currently trading against the US Dollar in the region of 1.3620 and against the British Pound in the region of 0.8087.