Tag Archives: Moody’s
As with most weeks there is a host of data anyone with a vested interest in the Euro, whether buying or selling, should keep a close eye on. Most will now be aware that a deal appears to have been finalised in Greece to allow the next tranche of bailout funds to be made available to prevent Greece from defaulting – this has led to some short term support for the Euro posting gains of just over 1% against the USD and GBP in the process. This week may also be key in determining the short term movements for the Euro. As my colleague mentioned below we have the Bank of England inflation report tomorrow, this will outline the potential for further Monetary easing form the UK’s and could go someway to determine investors appetite for risk. Of the pairing EUR/GBP the pound still appears to be benefiting from a degree of investor confidence when compared to the Euro (although the fact Moody’s the rating agency has moved the UK to negative from stable in terms of its AAA credit rating, the confidence in the GBP may fall a touch). Another key day will be Thursday as this time it is the turn of the European Central Bank to release their monthly report, this too should in theory confirm and conclude the second bailout for Greece and if so I would expect Euro strength against both the US dollar and pound following this release.
As with any data release no one can ever be certain of the outcome and the effect this will have on the market, the one thing I can be certain of is the continued volatility on the currency markets is likely to continue. I would expect EUR/GBP to remain around the 1.19 mark in the short term but with continued pressure on the UK economy (rising unemployment, reduced growth, the potential for more QE) I would expect to see a move below 1.19 in the next few weeks. as far as EUR/USD is concerned I too believe the Euro will strengthen as investor confidence increases and a move away from the ‘safe haven’ of the dollar is seen. I would expect a move towards 1.35.
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