This morning’s strong stance from Christine Lagarde, head of the European Central Bank, may well provide further support to the euro to pound exchange rates as we go into the second half of the week. By once again confirming the ECB will stay on course with it’s aggressive monetary stimulus program, despite the pressure emanating from Germany’s high court over the solvability of this course of action.
Lagarde’s commitment to the course remains clear and although the currency has historically weakened as a result of extensive quantitative easing, investors might be reassured by the consistent flow of money into the single bloc which may prove vital in keeping the economy afloat.
Tomorrow could prove to be the most decisive for EURGBP exchange rates however as a raft of economic surveys from the European Commission due for release at 09:00.
Destatis’s pivotal CPI release for Germany could also draw further question marks over the strength of the eurozone’s leading economy with growing concerns of a prolonged period of recession looming since the start of the year. Should prices fall below the expected 0.5% mark, we could see a shift in trend in favour of the Pound as the week comes to an end.
We have already seen a jump by over 1.3% from the pound since the low 1.11s we saw only a couple of weeks ago. It will be interesting to see if Sterling can regain it’s momentum to push for the 1.15s once more as we go into June.
EUR AUD: best time to buy euros with Australian dollars in over 90 days
The gradual shift in sentiment within global markets has been particularly apparent across the single currency’s pairings with some of the major commodity-based currencies like the Canadian dollar and to a greater extend the Australian dollar.
Indeed back when COVID-19 first took hold of the markets, we saw an efficient tightening in investor appetite for the riskier options in favour of the safe haven currencies like the US dollar, the Swiss Franc and indeed the Euro.
At one stage, the EUR to CAD rates jumped to an eye watering 1.58, particularly as the oil crisis came to the fold. Around the same period, EUR to AUD hit as high as 1.88.
Since however, as lockdown conditions have eased investor appetite seems to be growing once more, with EURCAD dropping by just over 4% to hit 1.51. Governor of the Bank of Canada Poloz’s enthusiasm at last night’s meeting may have gone down well with investors and so further support for the Canadian dollar could be expected. Thursday’s current account release which covers the flow of funds in and out of Canada for Q1 may prove to be an interesting barometer also.
Impressively, the AUD has managed to claw back over 11% against the euro in that time, reflecting just how much faith the markets seem to be holding in the Australian economy at present. This shift means we are currently within the best levels to buy euros with Australian dollars since the end of February, something to consider if you have an immediate AUDEUR transfer requirement.
Will EUR to USD break the 1.10 mark this week?
Some very positive housing data helped the US dollar start the week on the front foot during yesterday’s trading. According to the US Census Bureau, a further 600k contracts were exchange throughout the month of April despite the ongoing implications of the Virus.
Furthermore, the latest Standard and Poor’s home price index also posted an increase of nearly 4% in residential real estate prices which supports the argument that US consumers remain confident within current conditions which may also draw further support to the greenback in the weeks and months ahead.
It will be interesting to see if this positivity filters through to this morning’s business confidence release from the manufacturing sector. A surprise here could see a shift in trend for EUR to USD exchange rates and is worth monitoring as a result.
Of course, Thursday’s pivotal jobs data seems the most likely trend setter for the pair as the week comes to an end however, along with the latest GDP release for Q1 also drawing plenty of attention. Given how much focus has been on the US’s ability to maintain favourable trade conditions throughout the lockdown, those looking to buy dollars with euros may want to plan around Thursday’s event. With the pairing hovering around the high 1.09s but struggling to find the momentum to push beyond 1.10 on interbank rates, clients with a short term requirement may want to capitalise on these favourable levels just in case we see another knockback for the euro.
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