2019 is in my opinion looking like it could be a very tricky time for the Euro as the market is forced to digest the latest news on Italy and economic policy by the ECB, European Central Bank. Expectations are for a turbulent time as the market is forced to price in the possibility of an unravelling of the fragile confidence which has so far underpinned the Euro. December has actually been a good month for the single currency as it passes two key tests, 2019 might not be quite so fortunate however.
Whilst the troubles over Italian debt are soothed for the time being, there is a real risk of mounting concern over the longer term outlook. Italian debt is second only to Greece and I think will only become more of a problem in the future. It is worth noting that of the agreement reached between the EU and also Italy, over Italy’s budget proposals, many of the measures are pencilled to be implemented in the future.
That there measures are on the horizon should be of real concern for the future as investors must realises the problems inherent in their economy are just be shored up for the future. Clients with a transfer to make in the coming weeks might find that the Euro easily becomes centre of attention once again and this might see the Euro losing ground.
Another test survived in December was that of the ECB, who stated that they will be able to look at raising interest rates in 2019 or 2020 and are withdrawing their QE, Quantitative Easing program. This news was well received by the market but could easily weaken again as the Eurozone economy has a number of challenges to overcome in terms of their economy and global trading challenges at the risk of Donald Trump.
If you need to buy or sell Euros I think the currency should not be backed too heavily since 2019 offers up lots of potential threats which could see it much weaker. If you need to buy or sell Euros and wish to understand the latest market news and commentary, please contact myself Jonathan Watson to discuss the news and information further.
Merry Christmas and we look forward to hearing from you.