Monthly Archives: July 2011
Eurozone sticking plaster must surely peel off soon?
The Euro weakened dramatically at the start of the month as the world was reminded of the problems the eurozone debt crisis presents to not only Europe but the global economy. The ‘selective’ default pushed through via the ECB, IMF and eurozone finance ministers has done little to really tackle the root and cause problems. Greece has been thrown a lifeline but it cannot swim to the shore. The tremendous debt undercurrents that circle the murky waters it is treading must surely engulf not only Greece, but also those who have extended them the proverbial stick in the water.
Whether it is this month, next month, Christmas or in 2012, I cannot see how this issue won’t resurface. And what will we do when it does? I have discussed before the eurozone is inherently faulted. That by trying to manage a multitude of individual economies with one single economic policy they risk not being able to target the neccessary economic medicine each economy really needs. This could seriously hurt the euro as well as the pound and the dollar since the UK and the US have massive exposure to eurozone debt.
The euro has not recovered massively from July’s early weakness and as time goes on the crisis will surely resurface. We just don’t know what will happen at present but we can say it will be a big event when it does happen.
We are specialist currency brokers who write the blog for our clients and members of the public who have interests in the euro rate. If you have any currency exchanges why not give us a call? I have personally never had any trouble beating not only the banks but also other brokers and to that effect our firm have won awards for both our levels of customer service and perhaps more importantly our rates! Speak to me on 01494 787 458, international 00 44 1494 787458 to find out more. Alternatively e-mail me on jmw@currencies.co.uk. Please remember to ask for me Jonny and quote eurorateforecast.com for preferential rates.
Currencies.co.uk top the currency tables again… Certainly food for thought – Worth contacting them to compare against your bank or current provider according to the Telegraph – Get preferential rates by quoting Euro Rate Forecast on your enquiry!!
The Telegraph have released a table of the best exchange rate providers and i’m pleased to say the company I work for has come out top… Please feel free to view the article I have placed the link below, it is also on Yahoo finance. Should you make an enquiry then by quoting EURO RATE FORECAST you will be put through to either myself, Jonathan or James (the authors of this site) and treated with the highest level of customer service whilst receiving commercial rates of exchange as I do for all of my regular readers.
What now for the Euro rate?
Well the cat is now well and truly out bag. Or rather the bailout is well and truly out the bag. In line with most peoples expectations the Eurozone leaders have bought themselves much more time for Greece to pay back it’s debts. By lowering interest rates on existing loans and providing a system of loans to businesses the idea is to not only decrease the amount of interest the country pays (which has been crippling) but also to create the growth necessary for Greece to stand alone and pay its debts themselves. The economy has been shrinking and has been caught in a downward spiral with borrowing costs rising as their ability to pay back debts falls and vice versa.
Some form of agreement was widely expected and the markets whilst being slightly pleased have not improved massively. I would say the Euro has strengthened by about half a cent, which considering the close to 4 cent gains seen since the start of the month means if you are buying Euros you are still looking at great buying opportunities.
I dont personally think this will last. As discussed in previous posts the recent favourable GBPEUR rate was due to a weak Euro not a strong pound. The pound being notoriously weak is likely to weaken further next week following the poor GDP figures expected on Tuesday 26th July. If you have any upcoming currency transfers why not have a chat with us to see if we can help? We are specialist currency brokers who have won awards for our rates. I have never had any trouble beating not only the banks, but also other brokers. If you are interested why not e-mail me direct on jmw@currencies.co.uk or call on 01494 787 458. Ask to speak to me Jonny quoting reference Eurorate.
Have a good weekend!
European Debt Summit latest – Euro strengthens once again!Investors still seem content that everything is going in to this to save the Euro…
Personally I just cannot believe we continue to see the Euro gather strength, I have seen all sorts of comments today like the Eurozone is like a patient post a major operation and will still need intense help for the recovery along with 24 hour care… that was my favourite!
The general feeling right now is that investors are feeling comforted that everything including the kitchen sink has been thrown into a solution but my opinion is just what do they do next when this doesn’t work… surely they are completely up sh*t creek without a paddle and this whole thing is really going to blow up.
The Euro may hold firm in the short term due to Chinese buying, general investment and the halo that currently somehow is staying above it, however I feel we are now looking at Europe carrying out a major plate spinning excercise – sooner or later one of the plates will fall and we all know the Greeks love to smash plates!
If you have a pending transfer and really would like to know just what is happening and why, along with ensuring you get the very best rate of exchange you can for your transfer contact me directly djw@currencies.co.uk or call me during office hours on +44 (0)1494 787 462 I will be more than happy to help. Media quotes are also welcome just feel free to get in touch.
Thursday’s Day of Reckoning for the Euro
Thursday sees the Emergency Eurozone Summit in Brussels. We have covered many events in the Eurozone, but in my opinion this is the most important. Indeed the official agenda is ‘The financial stability of the euro area as a whole and the future financing of the Greek programme’, so dealing with Greece and implementing a second bailout will be a key feature. Jean Claude Trichet, the ECB President and Eurozone Finance Ministers will meet to discuss the next steps forward. They really need to come up with something to calm the markets as there are many indicators which point to another global financial crisis.
These include:
– The price of gold has reached a record high, underlining investors fears over other investments
– Global stock markets are significantly down
– The US Debt ceiling will be reached 2nd August, no plan to reconcile this is as yet confirmed
We have referred to the ‘kicking the can down the road’ scenario as the ECB and Eurozone leaders come up with short term solutions to fix this crisis and we may be reaching the end of that road.
As specialist currency brokers we keep our clients informed of market movements and give them the explanations behind the movements with a view to making sure they benefit from any volatility not suffer. We also have access to the sharpest commercial rates which we can offer to private clients even on smaller sums. Thursday will be a key day for the markets so if you have any upcoming currency requirements why not speak to us first to find out at no obligation all your options and what else may be happening right now that could be making your transfers more or less expensive.
Best GBPEUR levels since May
GBPEUR has improved slightly from recent levels following the Stress Test results which have done little to calm the market. As predicted the tests have been criticised for not being tough enough and the worries remain that there could be significant funding shortfalls across the European banking sector.
I expect this volatility to continue again as Eurozone finance ministers scramble around to work a solution. It is the unknown which is causing the fear and Euro weakness. What we have also seen and should be aware of is the pound dipping on falling confidence in the UK’s economic recovery. This week we have retail sales and the Bank of England Minutes which should help provide some clues as to the pace of the UK’s economic recovery ahead of next weeks official GDP figures (1st revision for Q2) for the UK.
If you have any currency transfers to make regarding the Euro it could be worth speaking to us here at eurorateforecast.com. We are a team of specialist and experienced currency brokers who have won awards for our exchange rates and levels of customer service. Feel free to contact me direct on jmw@currencies.co.uk to discuss all your options..
The name of the game is Bond’s – Expensive bond’s
If you look back at European 10 year bonds it goes a long way to highlight just how much trouble European states have got themselves in and just how quickly they have done so. Look at each of the countries that has been bailed out and the price of 10 year bonds over the last 18 months:
Greece:
Bonds in Jan 2010: 2%
Bonds in Jul 2011: 14%
Ireland:
Bonds in Jan 2010: 1.5%
Bonds in Jul 2011: 10%
Portugal:
Bonds in Jan 2010: 1%
Bonds in July 2011: 10%
When you look at this it is no wonder they cannot afford to pay back their own debt. It is even more worrying when you consider just how much European Banks are considered to lean on each other and the impact this could have on Spanish and Italian Bonds. These two are the lurking beasts that could really ignite the contagion situation and send global markets into panic.
The second round of stress tests are due tomorrow and the market, in my opinion hasn’t shown enough concern. This time round they are supposed to be stricter after so many Banks struggled previously. Like a Rocky Balboa comeback do not be surprised to see a predictable finish and for the tests to expose the Banks even more than before. It was leaked this morning that six Spanish Banks have failed and this is not going to inspire speculators looking to purchase the Euro and even more worryingly the long term implications for the price of Spanish Bonds’ does not look good.
In comparison to the other three PIIGS nations the price of Spanish and Italian bonds has been steady as a rock, but if this creeps up then the fear of contagion will sky rocket. In my opinion this is the key thing that European finance ministers are aiming to control – if Spanish and Italian debt remains affordable it puts all the money thrown at Greece, Ireland and Portugal into perspective. But is this going to happen?
If Spanish Banks are failing the stress tests it makes you wonder just how resistant they are going to be when, inevitably the other three come under more pressure. All this isn’t helped from the credit agencys who are downgrading their debt status quicker than you can say ‘The Euro will not fail’.
I hear a lot of clients saying ‘they won’t let these countries go to the wall, that they can’t', but I have a sneaky feeling of too little, too late. It certainly isn’t an impossibility let me assure you. If you are uncertain on how the price of Bonds or even the European Stress tests may effect your transfer then get in touch with your Currency Broker as soon as possible, the difference between the daily high and low at the moment has been over 1% – which means a volatile market. You can get in touch with the author directly (James Matthews) for a friendly chat about when you should be considering making your foreign exchange on 01494 787 451.
Sterling Euro Forecast
What an interesting few days for the GBPEUR exchange rate! On the Euro side the debt crisis came out of the woods and ruffled a few feathers, and this week the pound has had a suprise fall in inflation and unemployment. With nearly 4 cents movement between the high and the low since Friday there have been some teriffic opportunities for clients to take advantage of.
I would not be suprised to see that the Eurozone Finance Ministers will come to some kind of agreement that will stall the current European tensions as a result of the debt crisis. There is too much at stake politically and economically for the Eurozone, the EU, the IMF and the countries at risk to allow the project to fall through. I referred yesterday to the powers that be painting themselves into a corner and whilst I still hold that position there are still lots of options to take advantage of and don’t forget as we keep pointing out the UK is majorly exposed to this debt crisis through our banking sector. Sterling Euro has lost over a cent from yesterday’s highs and with the weak growth numbers expected 26th July I would expect this to continue. Don’t forget that yesterday’s inflation numbers back up the current course taken by the MPC (Monetary Policy Committee) at the Bank of England and affirm that there is no current need to hike interest rates. With that pressure removed and the focus for the UK more than likely shifting to growth (as this may now become a major factor if inflation continues downward) as to when rates will be hiked we could be witnessing an exchange rate hike for the UK sailing off into the distance yet further!
Look out for Friday’s Stress Test Results which could well move the market either way. It is possible investors have already priced in further Euro weakness from poor results so better than expected results may lead to Euro weakness and as explained there is quite a lot to weaken the pound at present.
Why take the gamble of exchange rates going against you? If you have any currency transfers to make why not speak to one of our dedicated team who will be more than happy to explain how our specialist service can save you money. Feel free to e-mail the author on jmw@currencies.co.uk if you agree or disagree!
Greek bailout tranche received, now it’s the Italian Job
The Euro continues to fall today amid a shifting spotlight that now focuses primarily on Italy, although other struggling countries help to share the burden.
Some economists, according to the media have already began to write off Greek debt – admitting that they are extremely unlikely to pay it off and are now focussing on suring up the most indebted nation in the zone – Italy. If a Greek bailout could have very serious effects and a Spanish bailout could be monstrous then what of the Italians? Well to put it quite simply Italy have been the nation that has managed to avoid the spotlight very well of late, but it is behind only Germany and France respectively as the biggest economy in the Eurozone. Much like the tiger lurking in the bushes it poses a quiet but very, very serious threat to the euro and indeed the global economy as a whole..
Borrowing costs in Italy (along with Portugal and Ireland) hit record highs on Friday and it seems that this has had a knock on effect of concern on stress tests of Italian Banks that are due later in the week as the Euro suffers again today against both the USD and GBP. There are also murmours that the European Bailout Fund may have to be doubled in order to potentially deal with an Italian collapse. All in all it seems speculator’s faith in the EUR is being tested. We all know the classic Italian Job cliffhanger ending, did they make it?… Will they this time? Call me an optimist but I think they will at this moment in time, but this is not by any means a definite. If any of the other nations (and the others will feel the strain more seriously than the Italians are now) are forced to default then the fear is that like a chain of dominoes Spain and Italy could follow suit, with a rather resounding crash. This is the eventuality that everyone, (especially if you have your funds in Euros!) wants to avoid.
With Euro rates falling a rather staggering amount over the last few days (0.6% vs GBP today and 1.6% vs the USD), I think we are seeing a sign of things to come. Put quite simply most of the Brokers in my office have been stating that the Euro is overvalued for some time now and it seems this is something finally being realised by the markets. It is also worth noting that this European weakness proceeds an Interest Rate hike only two working days ago!
As far as a forecast goes I actually don’t think the Euro is likely to go too much further in the short term, but these fears are moving from country to country as an almost daily occurence. Even though interest rates are likely to underpin the value of the Euro somewhat I think we will see Euro rates tumble in the next few months as more and more information is revealed about what a state some European countries are in. If you are looking to exchange funds in this time, try to make sure that you have moved before this happens. If you would like a more detailed chat about your requirement for free with the author of this article then please do not hesitate to contact me by calling this number and asking for James Matthews 0044 1494 787 451.
//
