Could we see further cuts in QE?
Figures published recently show the Eurozone grew at the fastest pace in over a decade during 2017 despite figures coming slightly lower than expectations for Q4. This could be used as justification that the Quantitative Easing (QE) program is working. QE is effectively pumping money into an economy in order to stimulate growth. It’s viability has been questioned in the past in other areas.
Monthly increments were cut last year from €60bn to €30bn which shows confidence in the economy. Further cuts would no doubt cause substantial Euro strength. Mario Draghi, the European Central Bank (ECB) President has stated QE may have to continue longer than the current target which shows a slight lack of confidence and indicating another cut in monthly increments could be some way off.
The Eurozone economy is looking strong at present and we could see it continue to prosper during 2018. There are causes for concern however, The Italian election is due to commence in March and there has been an emergence in right wing parties such as CasaPound. If a party such as CasaPound were to gain power their strong stance on immigration could lead to a referendum which would no doubt lead to a large drop in Euro value.
It is also worth keeping an eye on the situation in Catalonian. With many Catlalonians wishing for independence and control up in the air it is very difficult to predict the outcome. Uncertainty is worse than bad news in the currency market so keep an on this matter if you have a trade involving the Euro.
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