Mitsubishi UFJ: Divergence between the US Federal Reserve and the European Central Bank weighs on the Euro against the US Dollar.

Lee Hardman of Mitsubishi UFJ Bank stated in a report that recent diverging expectations regarding the policies of the Federal Reserve and the European Central Bank have pushed the Euro to a one-year low against the US Dollar. "While the US interest rate market has begun to reflect expectations of multiple rate hikes by the Federal Reserve, confidence in the necessity of further rate hikes by the European Central Bank has weakened in the Eurozone interest rate market," he said. He also mentioned that the euro area purchasing managers' survey released on Tuesday further dampened expectations of a rate hike by the European Central Bank, highlighting that the region's economy has slowed due to energy price shocks. In contrast, the impact on the US economy seems to be smaller, with stronger PMI data released on Tuesday. The Euro fell to a low of 1.1351 US Dollars.