Insight into future monetary policy may be available after the ECB meeting on Thursday this week, where interest rates are likely to be discussed although the expectation is not for another rate hike this week. We discuss how this release of information could impact the Euro, depending on which way it goes. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The Eurozone economy is seemingly going from strength to strength once again, following rumours from last week that the European Central Bank (ECB) are planning on amending (or hinting towards amending) its current Quantitative Easing programme at the next meeting at 12.45pm on Thursday.
Although it is very unlikely that any hike in Interest Rates will occur at this meeting, more information on when the bank will end its huge bond buying programme, or indeed reduce this further, would be welcomed by investors and we could see the Euro strengthen as a result.
At the very least we could see the ECB pave the way towards an announcement in July, giving them more time to assess the Eurozone’s economic progress, and taper the programme smoothly in September. However, if no information is provided we could quickly see the Euro’s strength unravel as it’s recent momentum has been driven mostly by rumour rather than fact.
On the political front, tensions have subsided a little regarding Italy’s new government, after it was confirmed over the weekend that having considered the idea, Italy have no intention of leaving the Euro.
Another factor to the Euro’s recent gains came yesterday when the Chairman of the Eurozone finance ministers Mario Centeno confirmed that Greece is now in a position to take control over its economic decisions after its current bailout ends in August. The Greek economy grew by the largest amount in a decade and for its fifth quarter in a row, according to figures released last week by Elstat.
Data releases to influence the Euro this week include the ZEW Economic Sentiment Survey released this morning at 10am. More attention is usually paid to the German version of this survey, with Germany being seen as the engine room of Europe. Expectation is for a fall in sentiment, however with the recent flurry of positive news from Europe, this release could surpass expectation and the Euro could strengthen off the back of this.
Industrial Production and employment figures are released tomorrow, which could also follow the positive run. However as highlighted above, the main event this week will be the ECB’s decision on Thursday. I would recommend clients with Euro exposure to get in touch with our team prior to this announcement.
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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