Today’s euro group meeting could be the next market mover. Finance ministers from each European member will be present to address the question of how the extra stimulus packages will be distributed across the bloc. The topic has been particularly divisive in recent weeks and so the markets could be watching closely for further details before committing further support to the Euro.
We have already seen the markets react to French President Macron’s decision to provide an impressive €15bn support fund for France’s aerospace industry. Importantly, this included a €500 million investment package for French SME’s, who were expected to be the main victims if an unbalanced distribution of support was laid out. The decision could set the path to protecting 3,000 jobs and so has helped rekindle investor appetite in the sector.
The Euro group may also come into the spotlight for another reason. The lobbying has begun for the replacement of Portuguese finance minister Mario Conteno. Spain have said this week they would support Economy Minister Nadia Calvino for the role although not all members have shown the same level of support. At this pivotal time and with some much debate around the allocation of support, a lack of overall unity here could hinder the single currency’s prospects in the long run.
We are also due key employment data from France this morning along with industrial output data from Italy. Given both nations are major players within the bloc, further drops in their respective releases may see another trend against the single currency and could add further weight to the justifications provided by the European Central Bank as they detail their plan in the days and weeks ahead.
It will be interesting to see if Friday’s industrial production release from across the bloc reflects this week’s troubling numbers from powerhouse Germany. A drop of nearly 18% was recorded for the month of April, following an already concerning 8% slip in March. Signs of persistent slowdown in output might not sit favourably with investors and is something worth monitoring if you are looking to sell euros to buy foreign currency this week.
GBP to EUR: Will the Euro be More Expensive by the End of the Week?
Against the pound the euro has remained relatively range bound so far this week with GBP EUR trending around the 1.12 mark and the single currency struggling to find enough momentum to break through that key 1.11 mark and beyond.
The last time this level was comfortably breached, the pound found itself trending in the high 1.06s barely 3 months ago. Friday’s pivotal GDP release could be the main driver for EURGBP exchange rates as the week comes to an end however with investors watching production levels across the UK with close attention for clues into how quickly the economy might rebound from the growing crisis. If you are in the market for sterling this week and are keen to capitalise on currency movements ahead, feel free to register your interest on the link below.
EUR to USD: Will the Latest Employment Figures Make the USD Cheaper?
The euro has continued its impressive rise against the dollar since the end of May with EUR USD rise now tallying up to 4.4% in just 2 weeks. On Monday the National Bureau of Economic Research confirmed the US officially fell into recession. At a time when job conditions (unemployment above 13%) and consumer spending levels continuing to slow as a result of the virus, clearly the market is struggling to find reasons to support the dollar at present. Yesterday’s added push was marked by a worrying string of inflation figures out of the US sparking fresh concerns of a recession despite the monumental efforts from the government and indeed the Federal Reserve to protect lending conditions and maintain a steady flow of liquidity across the economy.
This afternoon’s key employment data then could be the trend setter for USD EUR exchange rates in the second half of this week. Should we see further losses on last month’s record-breaking numbers we might see further losses for the greenback.
It will be interesting to see how long this trend continues for and whether or not the markets continue to lose faith in the Greenback should consumer conditions continue to worsen. Importantly, Morgan Stanley have told investors they believe the “worst is behind” the US economy whilst leaning on the robust and continued support from the government.
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