Tag Archives: Eu

Euro Coming Under Pressue As Expected

The Euro has begun to creak in the last couple of days against recent highs on the pound and the Dollar.  The Aussie has also smashed the single currency so what is causing this movement?

Well the Euro had strengthened significantly on the back of slightly better than expected inflation data last month and the ECB’s announcement not to change policy and actually increase growth forecasts.  However I felt these levels were unsustainable and it looks as though comments from the ECB members that negative interest rates are still a possibility.  We have inflation data for Germany on Friday and wider EU figures on Monday, and whilst UK figures were low but as expected this week, I think European figures could struggle.

If inflation is low then this could trigger another wave of Euro weakness and I suspect markets are already beginning to price this possibility in.  The ECB have said that prolonged low inflation would be difficult to combat, so any GBP EUR currency transfers may want to keep a close eye on Friday and Monday as rates creep back towards 1.20.  I don’t foresee huge sterling weakness given recent UK data so Euro sellers may want to move quickly to avoid potential losses.

The US Dollar has made headway against the Euro following the recent Fed Minutes and I still feel long-term that the Dollar will strengthen back- interest rates in the US will likely start going up next year at some point whereas the Eurozone will still be in a mire.

The Aussie has torn the Euro to pieces of late and surpassed even my expectations – the RBA have been pretty clear that the current cycle of interest rate cuts and whilst I expect the run of strength will rebound as speculators take profit, there may be a little bit more room in this run yet after Stevens speech in the early hours of this morning.  If you do have a currency transfer requirement and would like help getting the best rate then please feel free to call Colm on 01494 787 478 or email me at cmg@currencies.co.uk

Weak European Economic Growth (Tom Holian)

With growth in the EU having grown by just 0.1% in the third quarter of this year the figure is alarming. With the recent interest rate cut aimed at lowering inflation this also shows signs that the ECB is worried about the future.

Last week Mark Carney and the Bank of England raised the growth forecast by 0.3% for both 2013 and 2014 but on the continent things are looking rather unsteady. Many countries have already been bailed out during the last 2 years and austerity measures seem not to be working.

As unemployment continues to rise this could signal further falls for the Euro and could send Sterling through the 1.20 barrier before Christmas. Compared to the US who are currently experiencing 2.8% GDP for 2013 the Eurozone for the same period are just at 0.4%. France shrank by 0.1% in the third quarter and Germany slowed to 0.3% from 0.7% during the same period.

The Bank of England minutes are due out on Wednesday and all eyes will be transfixed on the data. With the UK deciding to keep interest rates on hold until UK unemployment hits 7% or less it will make interesting reading if there’s any sign that interest rates may be increased sooner.

If you are thinking about making a currency transfer and want to save money when buying Euros then get in touch for a free quote teh@currencies.co.uk

Greek hangover still weighing on the Euro

Greece is set to go to the polls again after days of coalition talks failed to produce an agreement on a new government. The elections on 6th May, showed a majority of Greek voters backing parties opposed to austerity plans demanded by the EU and IMF in return for two bailouts. Polls suggest the leftist Syriza bloc, which came second in the 6th May vote and rejects all further cutbacks, could become the largest party after a new election. Syriza wants to renegotiate the bailout package but also wants to keep Greece in the euro.

However European leaders say they will cut funding for Greece if it rejects the bailout agreed in March. This would effectively mean bankruptcy for Greece and German Finance Minister Wolfgang Schaueble again ruled out amending the agreement. Yesterday an interim ‘caretaker’ government was sworn in to power led by a  former high court judge Panagiotis Pikramenos will take the reigns until the new vote scheduled for the 17th June.

I feel this will continue to heap pressure on the Euro and any Euro sellers, certainly if funds are not liquid, may wish to consider a forward contract to guarantee their rate in advance. For Euro buyers this is potentially good news, however should you wish to take advantage of the current spike (we are trading at a near 3 1/2 year high on GBP/EUR) then a forward contract again might be the sensible option. Alternatively should you still have time on your side and have a particular target rate in mind then why not consider the use of a limit contract. This contract allows you to set a target price and should this level of exchange be reached your position will be automatically bought/sold. These contracts are designed to sit in the market 24/7 to make sure an opportunity is not missed, to discuss this and your position in more detail then please contact Mike on mgv@currencies.co.uk or call 01494 787 478.

Data for the rest of theis week to keep your eye on:

Today is a very quiet day with Bank holidays in parts of Europe. Tomorrow will see German CPI (Consumer Price Inflation) data. These inflation figures are important as they give a useful insight as to what the ECB (European Central Bank) will do with future interest rates. Should inflation be kept under control is gives more scope for rates to stay on hold or potentially fall which may well weaken the Euro further, we are expecting a small drop month on month from 0.4% to 0.3%.

Tomorrow we also have the start of the G8 summit, the meeting of the finance ministers from the group of eight industrialized nations that are the United States, Japan, Germany, France, United Kingdom, Italy, Canada, and Russia. Here the ministers will discuss important economic policy, and I am sure the on going euro zone issues will be top of theuir list so watch this space! To discuss this blog and my views or to run through the service we provide please email Mike at mgv@currencies.co.uk

Busy week for the Euro, which way is it likely to go?

Today we have seen the Euro post strong gains against the pound and hold steady against the US dollar. What has caused the Euro resurgence this afternoon? Increased risk appetite I feel is still causing a slight move in favour  of riskier currencies when compared to the US dollar and this is causing a move towards the Euro. An increase in demand for the Euro has lead to short term Euro strength purely as demand increases so to does the price. I feel the Euro may well continue to hold strong against the US dollar in the short term as the market has expectations for further quantitative easing in the US in the coming months. This may well continue to weigh heavily against the dollar and this may lead to subsequent further short term boosts in demand for the Euro and I feel a move back toward 1.34 likely for EUR/USD and 1.19 for GBP/EUR.

What data to keep an eye on this week?

Tomorrow morning we have EU retail sales figures and German Factory orders at 10:00 and 11:00 respectively. Both data sets will give the market clues as to the general performance within the EU as a whole and Europe’s largest economy Germany. EU retail sales are expected to pose a small decline and may therefore cause a small fall in Euro value following the release. Also this week we have industrial production figures from Germany at 11:00 on Thursday – again expected to show a decline month on month putting pressure on the Euro. The main data sets for this week for anyone with a GBP/EUR interest will be the ECB interest rate decision tomorrow at 12:45 (brought forward a day because of a European Bank holiday on Thursday and Friday) and the Bank of England interest rate decision on Thursday at 12:00. Both central banks are expected to keep rates on hold, however keep an eye on any further talk of quantitative easing from the UK.

As currency specialists we are here to help you achieve the best available market price at the point of your transaction. Unfortunately we have no control over market movements but through years of experience and an insight into what data sets can affect the market more than others we are happy to pass this experience on to our clients to help them make a decision as to when is the best time to exchange. Should you wish to discuss the service we can offer in more detail then please email me directly at mgv@currencies.co.uk

EU consumer confidence TODAY

Later this afternoon at 3 pm GMT the EU release their consumer confidence which is normally a report that does change exchange rates.  Today however I personally think that it will be even bigger news to the market as it also gives consumers thoughts about spending through the debt crises that in turn will probably affect the long term recovery of the euro zone. Expectations are for a drop so this morning we have already seen the euro weaken as it becomes cheaper to buy euro’s.  Later today after the report I would expect this trend to continue.

In other news we also have a number of reports coming from the US. As regular traders will know relationship between the dollar and euro is key as it is the largest traded currency pair.  As this price moves and currency changes hands it can affect GBPEUR as money either pores in or out of the euro.  These reports include jobless figures and home sales in the US, both of which are expected to be positive.  So in turn could further extend gains for sterling to euro clients as money goes out of the euro into the dollar.

Register your interest to the right of this blog if you would like to be contacted with breaking news if you do need to make a currency exchange.

www.currencies.co.uk