FXE: EUR/USD Fundamental Analysis – July 6, 2015 – Forecast
The EUR/USD gained 23 points to everyone’s surprise as traders focus on Sunday’s Greek referendum. The euro is trading at 1.1107 suggesting the no one is worried about the outcome. A not vote might cause some temporary market volatility but nothing more. A yes vote will bring about a new Government with a mandate from the people.
The dollar was under pressure on Friday following a mixed US jobs report that has investors questioning the likelihood of a September interest rate hike, while the euro was little changed ahead of this weekend’s Greek bailout referendum.
On Thursday, the US Labour Department said the world’s top economy added a solid 223 000 jobs in June but hourly earnings were flat compared with May. It also cut the estimates for job growth in April and May.
A strong reading would have lifted expectations that the Federal Reserve will hike interest rates soon. “This data doesn’t indicate the market is just going to pile into the dollar… It just leads to more consolidation at current levels,” Lennon Sweeting, a dealer at USForex, told Bloomberg News. But Ernie Cecilia, chief investment officer at US-based Bryn Mawr Trust, said the employment figures will do little to change the odds of a Fed rate rise this year, which is a plus for the dollar.
“The Fed is going to raise rates in the second half of this year and I do think the dollar will stay relatively strong,” he said.
Greeks go to the polls on Sunday to decide whether or not to accept its creditors’ bailout proposals, vote European leaders have warned is effectively a referendum on whether or not to stay in the Eurozone.
Prime Minister Alexis Tsipras broke off debt reform talks last week and called the plebiscite – leading it to default on a loan repayment Tuesday.
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