Tuesday, June 23, 2015

Euro devastation yesterday | Fall was in spite of Greek optimism

The European Single Currency suffered one of its biggest falls since the start of the year yesterday, coming down over 1.5% against the US dollar. The last collapse of this magnitude was on March 18th, when it came off over 2.0% against the US unit.

To explain the move, many commentators are pointing to the comments made by a member of the board of governors of the Federal Reserve, Jerome Powell, at a live discussion yesterday morning New York time, when he intimated that the first Fed interest rate rise could conceivably come as early as the September Federal Open Market Committee (FOMC) meeting, with the possibility of another in December, but the fact of the matter is that the move down had well and truly commenced in the Asian session, before governor Powell made his remarks, although they did accelerate the drop.

Fall was in spite of Greek optimism

And the move was in spite of optimism on the Greek matter, which most observers now believe will be resolved in the fullness of time (the only question is really how messy, or otherwise, the resolution will be). It was also in spite of yet another disappointing Durable Goods report from the US Census Bureau, which should, in theory, have depressed the US dollar (and it did, for about ten minutes), although New Home Sales stateside showed an improvement.

Later today sees the release of US Gross Domestic Product figures, always a closely watched event by the Forex marketplace.

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