Euro to USD takes support at 1.180 levels on ECBs announcement to keep monetary policy unchanged and lower the pace of net asset purchases under the PEPP.
Euro to USD Declines as Interest Rates Remains Unchanged
1 Euro to USD is at 1.1814 in the forex markets.
The Euro to USD saw a sharp decline from 1.1842 to 1.1804 levels on Thursday, but recovered later. The exchange pair declined 0.32% in the foreign exchange market after the ECBs announcement on policy rates. The Euro exchange rate to the Dollar was on a negative trajectory last week.
1 USD in Euro is at 0.8463 as of September 12, 2021. The USD to Euro exchange rate took support at the 0.8414 levels and closed for the weekend at 0.8463.
The Pound to Euro today is moving higher to 1.1711 levels after the ECB policy meeting on Thursday, September 9. It shot up to 1.17 levels on Thursday, an increase of 0.40%. The Pound to Euro is at a three-week high at 1.1711. The weaker Euro has strengthened the British Pound in the foreign currency exchange.
The US Dollar slid from 92.70 to 92.47 on Thursday, a decline of 0.25% in the forex markets.
PEPP Bond-Buying Program to Decline
The ECB has left monetary policy unchanged on Thursday. Interest rates will remain at 0.00% and 0.25%. The Euro exchange rate weakened after the ECB announced decisions on policy rates and the bond-buying program, but recovered later.
The PEPP emergency bond-buying program is at €1,850 billion. 1Euro to USD gained after the ECBs announcement of tapering in the emergency bond-buying program in the coming quarter. The Asset Purchase Program, APP, will continue at €20 billion per month.
ECB President Christine said that the high inflation in the Eurozone is temporary and will resolve soon. Her optimistic remarks were encouraging. Under its pandemic emergency purchase program, PEPP, the ECB plans to slow down its net asset purchases, as virus cases are coming down and the economy has started to reopen after the lockdown. Businesses are functioning, and travel restrictions are coming down. It is time for slow withdrawal of stimulus measures, says Lagarde.
Lagarde says, “We are recalibrating”. “It is a joint assessment, and we are doing it based on the framework”, says Lagarde. The PEPP was implemented during the Covid-19 crisis to support the Eurozone economy in March 2020. It will end in March 2022, she says.
1 Euro to USD gained 2%, after a decline, on the ECB decision to keep interest rates unchanged and to bring a tapering in the bond-buying program.
Eurozone
The next ECB meeting is on October 28, and again on December 16. The tapering measures in the Eurozone economy will end soon, say officials.
PPI m/m shows significant improvement from 1.4% to 2.3% in July 2021. It is the highest increase since January 1995. The Producer Price Index reflects the consumer price inflation, as it plays an important role in the overall inflation.
Final services PMI has come down mildly from 55.5 to 55.0.
Retail sales month on month shows a sharp decline from 1.8% in July 2021 to -2.3% in August. Consumer spending has come down as Germany and France show muted economic progress. Sales saw a sharp fall of 5.1% in Germany.
However, revised GDP quarter on quarter is revised higher from 2.0% to 2.2%. The reopening of the bloc has brought in a good recovery in domestic demand and activity. The Covid-19 vaccination program has been progressing well.
The ZEW economic sentiment has come down from 42.7 to 31.1. In particular, the German economy is yet to recover from the pandemic effects. It reflects negatively on the overall health of the Eurozone. However, experts predict that the economic situation will improve in the next six months.
The US bond yields are on the decline, which drags the greenback lower. The Euro benefits from the weakening dollar, as US 30-year bonds are at 1.91%.
The US Dollar Euro unemployment rate has come down from 7.8% to 7.6%. The US Initial Jobless Claims has contracted to 310k.
EUR/GBP Declines after ECB Policy Meeting
The Euro to Dollar conversion declined on Thursday after the ECB kept the monetary policy steady. The United Kingdom shows lower than expected economic growth. However, the industrial sector has gone up, with better demand from the domestic market and higher exports. The Euro to Dollar today, September 12, 2021, is at 0.8534.
Bank of England is moving towards reducing economic stimulus after the fast vaccination drive.
The Pound to Euro exchange rate is moving higher after the ECB policy meeting on Thursday. The decision to reduce the quantitative easing program has brought down the Euro region, driving the British Pound higher. The Bank of England is willing to raise rates sooner than the Federal Reserve or the ECB.
British Pound to USD saw high volatility last week and closed at 1.3839 for the weekend. Economic data released last week reflected that growth was lower than expected. However, the ECB announcements kept the Sterling higher in the foreign exchange market.
