Below is an overview of current market events that may affect euro exchange rates, against three of our majorly traded currencies. If you would like information of a currency not mentioned below, then please feel free to contact me directly at email@example.com or on 00 44 1494 787 478 for the latest market information.
Thursday was seen as a key day for GBP/EUR rates, with the release of the BOE and ECB interest decisions. As it happens both of these rates were unchanged at 0.5% and 0.75% respectively and some early euro strength was quickly eradicated by the end of this morning’s trading. What could turn out to be today’s biggest story and market mover is Mario Draghi’s statement unveiling his bong buying plan, aimed at easing the euro-zone’s debt crisis. He said the scheme would provide “a fully effective backstop” and was critical to the long-term future of the EU and ultimately the single currency. Draghi and the ECB aim to cut the borrowing costs of debt-burdened EU nations by buying their bonds, a scheme German Chancellor Angela Merkyl was far from keen on in the past. It is hoped this will stop future economies getting to the brink of collapse, as we’ve seen with Greece. We also had reports out from the respected OECD who have predicted the UK economy will contract by 0.7% in 2012, a revision worse than their previous estimates of 0.5%. Due to these factors I feel that we may well see the euro fight back towards 1.25 against Sterling, assuming Draghi’s scheme is put into practise and isn’t met with fierce opposition. Anyone holding euro today and wishing to transfer that back to Sterling would have received an extra £500 on a 100,000 euro transfer at the high of the day compared to the low.
The single currency has continued its fightback against the greenback, slowly moving away from the all time lows we experienced during the summer. It has moved over 5 cents in the past 6 weeks amid growing political unrest in the US and the uncertainty surrounding the upcoming presidential elections. Add to that the FED’s acceptance that they may be required to boost the economy through further rounds of Quantitative Easing and it is easier understand why we have seen this movement of late. How far it will go depend on developments in the EU but after today’s announcement by the ECB of their bond-buying scheme I stick by my predictions in previous posts that we could well see EUR/USD rates move through 1.30 before the end of the year.
The euro has lost ground against the AUD during Thursday’s trading, which has come as a bit of a surprise considering Draghi’s statement today. Overnight we also heard that Australian GDP figures were poor, showing a slowdown in economic activity. This is following reports that Australia’s economy is at risk of recession in 2013. Commodity prices are rising and the demand in China for Australia’s raw materials is starting to slow. There is also a general feeling growing that Australia’s policy makers are becoming “complacent” but despite these negative reports I still believe the AUD leads the way, as one of the world’s strongest currencies. For this reason anyone holding euro and looking to purchase AUD may want to consider their positions over the coming days.
This market uncertainty can be difficult to digest, especially if you have an upcoming property purchase or sale and are looking to transfer funds but are worried that market movements will ultimately leave you short changed. Here at Foreign Currency Direct plc we have multiple contract types all tailored specifically towards our clients needs. One of our most popular types is our forward contract, which allows you to lock in an exchange rate even if you do not have the full funds available. This is perfect for anyone looking to eliminate risk from the market but still take advantage of our award winning rates. If you would like more information please contact me directly at firstname.lastname@example.org.