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US Dollar Hits 10-Day High Versus Euro, as US Economy Accelerates

Market CommentaryUS Dollar Hits 10-Day High Versus Euro, as US Economy Accelerates
The US dollar to euro interbank exchange rate has hit 0.8155 today, its highest since February 12th, as US business activity expanded at the fastest pace in 27 months in February, said IHS Markit yesterday. Image credit: Jose Silva.
The US dollar to euro interbank exchange rate has hit 0.8155 today, its highest since February 12th, as US business activity expanded at the fastest pace in 27 months in February, said IHS Markit yesterday. Image credit: Jose Silva.

by Peter Lavelle

Welcome to Pure FX’s latest update of the US dollar to euro interbank exchange rate.

This tells you when it’s a favourable time to exchange US dollars to euros, for your money transfer!

The greenback shoots higher versus the common currency! The US dollar to euro interbank exchange rate has hit 0.8155 today, its highest in 10 days, or since February 12th.

The US dollar has strengthened against the euro, because US business activity expanded at the fastest pace in 27 months in February, said a closely-watched survey yesterday.

The buck has risen, because according to IHS Markit’s composite PMI of US services, manufacturing and construction, US activity hit 55.9 this month, the highest since November 2015.

This has strengthened the greenback, because this figure of 55.9 was well above the 50.0 figure that signals growth, as well as forecasts for 54.4, plus January’s figure of 53.8.

What’s more, the US dollar has also climbed, because confidence among America’s businesses for the next 12 months has hit its highest since May 2015, said IHS Markit too.

In particular, the buck has jumped, because America’s businesses are benefiting from greater sales volumes, and hopes for a sustained improvement in business conditions this year!

Euro weakens, as Eurozone business activity eases

Furthermore, the US dollar has also jumped against the euro, because business activity in the Eurozone eased more than forecast in February, said a respected economic survey yesterday.

According to IHS Markit’s monthly survey of Eurozone firms, activity in the European bloc’s services, manufacturing and construction sectors eased to 57.5 this month, thus weakening the euro.

This February figure of 57.5 was below January’s record-high figure of 58.8, plus financial market forecasts for a stronger 58.5, thereby dragging down the common currency.

In particular, business activity in both Germany and France, the Eurozone’s largest economies, eased more than forecast this month, with Germany at a 3-month low, so weighing on the euro.

In addition, the Eurozone’s exports sub-index fell to 56.8 in February, the lowest figure in 7 months. This tells us that the European bloc is selling less abroad, also hurting the euro.

Given all this, the US dollar to euro interbank exchange rate has reached this 10-day high, and could rise further!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

References

1. Anonymous, “U.S. flash manufacturing PMI index rises in February”, February 21st 2018, EconoTimes.com, https://www.econotimes.com/US-flash-manufacturing-PMI-index-rises-in-February-1162843
2. Anonymous, “U.S. Private-Sector Growth Fastest Since 2015, Though Cost Pressures Continue– IHS Markit”, February 21st 2018, HellenicShippingNews.com, http://www.hellenicshippingnews.com/u-s-private-sector-growth-fastest-since-2015-though-cost-pressures-continue-ihs-markit/
3. Jonathan Cable, “Euro zone businesses lose some steam but are still fired up”, February 21st 2018, Reuters.com, https://www.reuters.com/article/us-eurozone-economy-pmi/euro-zone-businesses-lose-some-steam-but-are-still-fired-up-idUSKCN1G50WJ
4. Piotr Skolimowski, “Euro Area Hits Speed Bump on Road to Faster Economic Growth”, February 21st 2018, Bloomberg.com, https://www.bloomberg.com/news/articles/2018-02-21/euro-area-hits-speed-bump-on-road-to-faster-economic-growth
5. Vivek Kumar, “US Manufacturing PMI Rises to 55.9 in February; Highest in 40-Months”, February 21st 2018, TradeCaptain.com, https://tradecaptain.com/news/economy/17660-us-manufacturing-pmi-rises-to-55-9-in-february-beats-expectations-21-feb-2018

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