Euro exchange rates have started the week extremely positively against all major currencies as the markets now feel that an agreement on a post-coronavirus recovery fund is getting closer, however this has not been totally plain sailing and reports only yesterday had originally touted that there had been a few flare ups over the past few days, which may not have done relationships any good in the bloc.
A report on the BBC had suggested that there were deep differences between some member states as the Eu attempted to to not only negotiate a deal on the post-coronavirus recovery fund but also the next long term budget for the bloc too.
With many different nations that have economies that could be deemed as vastly different to each other this task was never going to be an easy one, and quite often there are issues when trying to come up with a workable fiscal policy for the Eurozone. When you have a large economy such as Germany and a struggling economy such as Greece working off the same plans you really do need to think long and hard as to what those plans are going to be.
Talks on the recovery fund have now entered a 4th day and despite reports that French President Emmanuel Macron banged his hand on the table and threatened to walk out on the talks last night, this morning there does seem to be some light at the end of the tunnel, well at least the markets certainly do believe so.
This is the longest EU summit since 20 years ago in Nice which went into a 5th day, so it is likely that if the group are getting close then they would like to get something wrapped up before the end of the day.
This news has been taken as extremely good for the Eurozone and indeed the Euro, this is an area that could have caused hugged political tensions and a delay in getting this resolved could have also added to economic problems too.
Euro Exchange Rates Hit Multi Month Highs
EUR USD interbank rates as this is being written are sat at a three-month high with the market level nested just underneath 1.15 and EUR GBP interbank levels are over 0.5% up already this week with EUR GBP interbank levels sat at 0.9140.
The EUR GBP level is closing in on being the highest it has been since towards the end of March, with EUR USD sat at the highest currently since March 9th, this could present a great selling opportunity for those with Euros to exchange, Euro is currently up against every major currency on the board.
We must also be cautious that although the EU do appear to be moving closer to an agreement there is still a chance that this may fall through and talks could break down, should this be the case we may see Euro exchange rates retract fairly swiftly as both political uncertainty and political instability will likely rise off the back of this news.
The week ahead is fairly quiet for economic data for the Eurozone until we get towards the end of the trading week, where we have a flurry of market data out over the course of Friday mornings trading.
Friday brings services, manufacturing and production data for various areas within the Eurozone, there aren’t any huge surprises expected with this data but in this current global situation you never say never, so it will be worth keeping an eye on.
The main focus does appear to be the post-coronavirus recovery and budget discussions mentioned earlier in this report and of course any Brexit news that filters through over the course of the trading week.
Brexit can easily be forgotten when in the midst of a global pandemic, but this is one factor that is still ongoing, and the clock is well and truly ticking as a deal does need to be lightly in place you would imagine in the next 8 weeks.
Currency Exchange – Euros
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