The Euro has been weaker owing to the uncertainty of the Italian budgetary plans and just how that will influence Italy’s economy in the future. The Italian government is sending mixed signals to the market but by rejecting the EU’s rules, the Italians have set themselves on a collision course for the future where they might well find further difficulties ahead. The economic concerns over Italy are high, with Italian debt at 132% of GDP. Further Euro weakness over this issue seems probable to me and clients buying or selling Euros should be very aware of the implications from such events.
Italy is not the only country where there are economic and political concerns which might weigh on the Euro. France is also throwing some concerns owing to the ‘yellow vest’ protests which are over a new fuel tax. Events will now become increasingly crucial to french President Macron as he had come into power expected to handle the unions and any protest groups. The Euro might weaken over which direction events might take in the future.
December is an important month with the latest ECB interest rate decision due on the 13th December. The European Central Bank has been a key figure in driving the relative strength and weakness of the Euro. The ECB are expected to announce plans to withdraw their QE, Quantitative Easing, plans which might see the Euro stronger. However, there is a belief that owing to recent economic slowdowns in some Eurozone countries and the recent political concerns, the ECB might have been too bold in their assessments. Any ‘back-tracking’ by the ECB would see the Euro weaker and this could present a good opportunity for any clients looking to buy Euros at present.
Depending on which currency you are buying or selling Euros against, it is well worth considering other events which might move the rates. On the sterling side Brexit uncertainties and the 11th December parliamentary vote could all be crucial. For the US dollar the 19th December sees the latest US interest rate decision. The extent to which these events will impact Euro rates could be significant and clients buying or selling Euros in December or 2019 should be aware of some potentially choppy waters ahead.
Thank you for reading and please feel free to contact me to discuss any currency exchange further. I look forward to hearing from you and discussing this further in the future.
Thank you,
Jonathan Watson
