A former advisor to China’s central bank has said China should stop buying Euro bonds and should only do so if certain conditions are met. Whilst Yu Yongding’s views may not represent official Chinese policy, and China has regularly expressed confidence in the Eurozone, they have yet to lay out any concrete support package should the single currency remain in trouble. China holds over a quarter of its FX reserves in Euro and so its approach to this could be instrumental in any long term solution.
Euro Dollar exchange rates have moved around 6% in the greenback’s favour over the last few weeks as the Dollar has strengthened amidst a new flight to safety, especially as the alternative option, the Swiss Franc, has been made a lot less attractive by the Swiss National Bank.
Bank of England Minutes are released in 25 minutes so will be key to short term GBP EUR rates- be ready to move quick on any news of Quantitative Easing being discussed or not.