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Euro Rates down against the Pound and US Dollar as market awaits ECB decision on Thursday.
Euro exchange rates have fallen against both Sterling and the US dollar as the market eagerly awaits the result of the European Central Bank interest rate decision and subsequent conference from Mario Draghi. Following Draghi’s statement in August that he will do ‘whatever it takes’ to secure the status of the Euro the market is expecting something fairly substantial from the central bank on Thursday to install confidence in the Euro zone. To me this, and the potential for the ECB to cut interest rates from 0.75% to 0.5% (something that has probably already been factored into the current prices) is likely to determine the short term direction for the Euro. In recent months we have followed this trend before and on each occasion the outcome from Europe has done very little to dampen the mood of investors and their confidence in theEuro zone, my concern for Euro sellers is that this situation may continue. I personally believe a continuation of the Euro bond policy will be seen, however is this not just an extension of policies that are already in place and do not seem to be working? Buying more bonds and making more funds available to the financial system is something that needs to be done to ease the burden on Spain, Italy etc however will the mud stick? I feel the market needs to see something else from the ECB. What this is I am not sure, but I personally think by just continuing with its bond buying policies confidence in the Euro is unlikely to be restored and a move towards 1.27/28 seen for GBP/EUR and EUR/USD towards 1.24. I also feel an interest rate cut, as many expect, will also hinder short terms moves for the Euro.
Other data to watch out for this week will be European Retail Sales figures tomorrow at 10:00, expected to show a contraction month on month from -1.2% to -1.7% (could see Euro losses as a result) and also GDP data from Europe on Thursday morning at 10:00 – this is is forecast as a slight improvement from -0.3% to -0.2%. For anyone particularly interested in GBP/EUR then also watch out for the Bank of England interest rate decision prior to the ECB’s release at 12:00. Nothing too dramatic expected from Mervyn King (head of the Bank of England) however it is still one to keep an eye on.
To discuss my views and the recent market trends then please do not hesitate to contact me (Mike Vaughan) and I will happily run through my thoughts and views on current market conditions. As a specialist currency broker a number of tools can be utilised in an attempt to maximise your currency exchange and I would be more than happy to run through these and the service I provide in more detail. Savings when using a broker can be well in excess of 2-3% when compared to the banks so please contact me directly on [email protected] or call 01494 787478 to discuss the service in full.
2012-09-04 08:52:15
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