Instability in Euro to US Dollar Rate Following Federal Reserve Meeting

The euro has gained ground on the US Dollar overnight and this morning GMT, in response to the Federal Reserve’s dovish policy statement yesterday, where interest rates remained unchanged.

After buying $1.091 early afternoon GMT yesterday, the euro then fell to just over $1.086 after the Federal Reserve announced its current vision.

Although that rate was a 24 hour nadir, as the euro climbed back to buying the greenback at $1.91 after 6PM GMT yesterday evening.

Following another slight fall this morning GMT, the euro is currently buying $1.09.

Federal Reserve Focus on Inflation

As many analysts had predicted, interest rates remained unchanged in a climate of disappointing inflation results for December last year, where the consumer prices index had slipped by 0.1%.

In the statement, the Federal Reserve also admitted that economic growth had slowed down late last year, but labour market conditions at the same time had improved.

Although with adjustments to monetary policy stances, the economy is expected to grow at a moderate pace throughout this year.

In turn, this should force upward pressures on inflation, especially as the effect of low energy prices is expected to be reduced, and the 2% inflation target is expected to be achieved over the medium term.

The target range for the federal funds rate, the inter-federal depository institution lending rate, is also to remain unchanged at 0.25% to 0.5%.

The euro also might face some more pressure from the US dollar, as oil prices have seemingly turned a corner from dipping below $30 per barrel. According to NASDAQ, a barrel of Brent Crude is now trading at just over $33 per barrel.

There have also been hints from country representatives of OPEC, that quotas might be reduced to stabilize oil prices.

Eurostat Reveal Figures on Contingent Liabilities and Non-Performing Loans for EU countries

European Union countries figures on their amount of contingent liabilities and loans which are not performing, in ratio to their GDP, has been released.

The liabilities include government guarantees, liabilities related to public-private

partnerships recorded off-balance sheet of government. And liabilities of government controlled entities, which are classified outside general government, such as public corporations.

Germany recorded the most liabilities, with the total of contingent liabilities and loans reaching 115.1% of their GDP. With 110.5% of liabilities total accounted for by future obligations in the government controlled entities.

The Netherlands currently hold the second highest amount of future liabilities, at a ratio of 109.2% to their GDP.

As with Germany, government entities was the most influential aspect of why the figure was high, claiming 91% of the total.

Slovakia has the lowest amount of liabilities in the EU, with just 2% of GDP taken by future financial responsibilities.

Lithuania and Estonia followed, with 7% and 8.6% respectively of their GDPs held by contingent liabilities or loans.

The figures are closely tied to the economic, financial, and legal structure of the country.