European currency holds above two-week low
Full pricing of US rate cut possibilities
The euro rose in the European market on Thursday against a basket of global currencies, for the first time in the last three days against the US dollar, to hold above the lowest level in two weeks, as buying activity from corrective levels, and thanks to hopes of narrowing the interest rate gap between Europe and the United States.
Especially after weak economic data in the United States raised the possibility of the Federal Reserve cutting interest rates in September and November to full pricing.
Price overview
• Today's Euro exchange rate: The Euro rose against the dollar by 0.2% to ($1.0858), from the opening price of ($1.0840), and recorded its lowest level at ($1.0828).
The euro ended Wednesday's trading down 0.15% against the dollar, in its second consecutive daily loss, and recorded its lowest level in two weeks at $1.0826, due to lower-than-expected results from major sectors in Europe.
European interest
The chances of the European Central Bank cutting interest rates at its September meeting are still less than 50%, pending further data showing the development of growth and inflation levels in the Eurozone over the coming period.
US interest
Data showing a sudden contraction in US manufacturing activity in July has led to the pricing of a 25-point US interest rate cut in September rising from 94% to 100%, and a November cut from 98% to 100%.
Interest Rate Gap The interest rate gap between Europe and the United States is currently 125 basis points in favor of US rates. Given the current odds on European and US interest rates, the gap is expected to narrow again to 100 basis points in September.
