Will the ECB scale back their QE program?
The Euro rate is in for a very busy week with the latest Eurozone interest rate decision released. There is a growing impression that we could see the ECB, European Central Bank scale back on their current ambitions to withdraw the QE program by the end of this year, and to raise interest rates by September 2019. The ECB decision on Thursday could see some volatility as investors scramble to best understand exactly what is around the corner.
There is now a growing belief and understanding that some of the more global tensions surrounding the Trade Wars could lead to a weakening of the Euro as the ECB might be forced to backtrack on their previous commitments. Whilst Trump and Michel Barnier did seek to negotiate a plan to soothe previously frayed relations, there are still many undecided issues.
Trade Wars weaken the Euro
Germany factory orders have been declining month on month which is a great cause for alarm since the German economy is the main engine of the Eurozone. Further escalation of Trade Wars whether directly between the EU and US or between the US and China, will all serve to dampen enthusiasm for German goods and services. Such concerns might easily feature in the ECB’s latest assessment on Thursday, clients buying or selling Euros should be making plans ahead of the event.
It could also be a busy week for GBPEUR with the Bank of England also releasing their decision at 12 on Thursday, just before the ECB has released their latest decision. Expectations are for a subdued Bank of England following the interest rate rise last week but with Brexcit uncertainties driving sterling, anything could happen.
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