On Thursday of this week the ECB will meet to discuss the future purchasing of assets; we could see a complete end to QE by September. The Euro report below discusses how we could see the Euro strengthen if QE measures were to come to an end. The table below shows the differnence in Euros you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
The European Central Bank will be meeting on Thursday to discuss the prospects of asset purchases beyond September and many sources expect QE to be reduced or potentially coming to an end by September. However, this Thursday we may not have the full details until possibly next month.
If there is any signal that QE may be coming to an end I would expect to see the Euro strengthen against both the US Dollar and the Pound as it could mean that the next change in monetary policy could be a rate hike in the Eurozone.
Clearly a change in interest rates is unlikely to be happening in the short term but with QE potentially finishing in the next few months then the next step would be when they may look to start increasing interest rates and this could help the Euro strengthen.
Meanwhile in Italy things are still not yet fully resolved and until things settle down I don’t expect to see a rate hike coming anytime soon. However, if the ECB does not provide any clear guidance about when QE may be ending then we could see some volatility for Euro exchange rates so make sure you keep in close contact with your account manager on Thursday afternoon who will be able to keep you updated with events.
On Wednesday the Eurozone will announce its latest Industrial Production data combined with their Employment Change. Both sets of data have been showing continued signs of improvement during the course of the last few months and another positive release could help the Euro.
Indeed, as this comes out the day before the latest ECB meeting then I think this could provide further evidence in favour of ending QE if the data is positive.
Last week the Euro had 5 consecutive positive days vs the US Dollar but remained in a tight range against the Pound as investors are likely to be keeping a keen eye out on what may happen with both the EU withdrawal bill discussions as well as the latest ECB meeting.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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