Shallower rate movements this month
Many currency pairings over the last month have seen rapid fluctuations with little to no trends, or rates moving consistently in one direction for any reasonable amount of time. The EURUSD interbank exchange rate has been no exception as the mid-market level has not been rising or falling for more than 3 days in the same direction, before violently strengthening or weakening accordingly. It does appear that we have seen less volatility than last month though as the range of rate movement has been undulating by just 2 cents between 1.077 and 1.097 with current levels residing at 1.086. In comparison, March saw rates move a maximum of 7 cents between 1.07 and 1.14. As these nations got used to the initial shock of being hit by the virus, the currency market has relaxed as such and bigger currency movements have become rarer.
Key Data Releases Out This Week
This week both the US and the EU will see the release of their respective Gross Domestic Product (GDP) for Q1 and Year on Year alongside their Interest rate decision which is out for the US today, and the Eurozone’s coming out on Thursday. The US Federal Reserve is expected to keep rates on hold at 0.25%, but emphasis has been put on “projection” according to FX Street as the Central Bank has dropped rates from 1.75% alongside a $700bn bond purchasing program so needs to evaluate how effective policy implementation has been before making any other changes. The European Central Bank seems to be taking a similar stance as well, with interest rates having been at 0% since 2016, there have been suggestions that QE measures may be introduced in June, but for the time being it seems economic observations will just be undertaken.
In other data releases, today will see the US GDP and Europe’s Harmonized Consumer Price Index, Thursday will bring US Jobless claims alongside the EU’s unemployment rate equivalent with their GDP release too. Friday will finish off the economic data with the ISM Manufacturing Employment and accompanying Purchasing Manager’s Index.
With the euro and US dollar receiving their GDP figures so close together it will make the markets easier to draw comparisons to evaluate the economic disparities between them and potentially stimulate further rate volatility.
The rest of this week may well be data-driven considering the type of releases published so for clients looking to invest in euros or US dollars you will want to keep a close eye on each release for small windows of opportunity.