Dollar rises as Greece uncertainty continues

Enrique Díaz-Álvarez21/Apr/2015Currency Updates


Sterling traded within a narrow band against the Dollar for much of the afternoon session on Monday, ending trading 0.2% lower on Greenback.

Yesterday saw the release of Ernst & Young’s famous ‘Item Club report’, which claimed a recovery in the troubled Eurozone and ultra-low inflation would boost growth in the UK this year. The growth forecast for 2015 was revised down slightly from 2.9% to 2.8%, although expectations for 2016 were increased to 3% expansion. A recent improvement in the Eurozone economic performance is expected to cause exports to increase by around 6% this year, with inflation set to remain “very low” until at least the end of the year. On the General Election front, three separate polls were releases in the UK yesterday, yielding mixed results. An ICM poll suggests the Conservatives have edged ahead of Labour at 34% to 32%, although results of a Populus still put Labour marginally ahead.

A lack of data in the UK on Tuesday means all eyes will be on the major political parties with now just over two weeks until polls open in Britain.


The single currency fell versus the Dollar on Monday after the recent uptick in Eurozone economic performance reversed temporarily. The Euro depreciated by 0.2% against Greenback.

There were a number of mostly second-tier announcements in Europe on Monday that caused moderate movement in the Euro. Germany’s producer price index, a measure of the average changes in price of the German primary markets, surprised to the downside. The monthly economic indicator continues to trend upwards, although remains negative at an annualised -1.7%. Prices increased by a seasonally adjusted 0.1%, in line with the preceding month.

Eurozone construction output suffered a setback. Overall construction activity declined month on month in February by 1.8% according to statistics agency Eurostat. Large decreases in production in Germany, France and Portugal caused construction output to soften by an annualised 3.7%, its largest drop since as far back as May 2013. Elsewhere,uncertainty surrounding Greece’s negotiations with creditors continues. Deputy Prime Minister for Greece Yannis Dragasakis conceded snap elections could be called if negotiations with its creditors fail.

This morning will see the release of the ZEW economic survey for the Eurozone and Germany, likely to cause moderate Euro volatility.


A strong start to the week for the Dollar saw the US Dollar index climb by 0.3% over the course of the day.

A snapshot of the US economic landscape showed a slowdown in growth last month, in line with the recent poor weather that plagued much of the country. The Chicago Fed National Activity index decreased from a revised -0.18 to -0.42, its lowest reading since January 2014. A second consecutive reading below zero indicates growth below historic norms. The more representative three month moving average, designed to smooth out month on month volatility, also declined further to -0.27 in March following a slowdown in production and employment. With economic performance in the US continuing to disappoint in the first quarter, Bloomberg’s economic surprise index, which measures whether data is exceeding or missing forecasts, is now currently sitting at its lowest level since the financial crisis.

Today will be another mostly quiet day in terms of data releases in the US economy. Trader’s attention this week will instead focus on labour data on Thursday and durable goods orders on Friday.

Rest of the world

Russia’s Ruble was the worst performing currency in the world on Monday, down by around 3% against the Dollar. This was after the central bank raised the rate at which it lends foreign currency to banks through repo auctions for the second time this month.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.