Member states are currently discussing an EU banking union and a European monetary fund, Germany has shared concerns about taking on too much onus to foot the bill for shared EU debt. Today's Euro report looks at how this has the potential to impact Euro rates of exchange, and outlines the key data releases coming up this week for the EU. 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|
Euro zone member states are discussing deeper integration of their economies, focusing on a banking union and the transformation of the European Stability Mechanism bailout fund into a European Monetary Fund.
What is currently missing is a European Deposit Insurance Scheme, which protect deposits of up to EUR100000 in any euro zone bank.
The move, pushed forward by France President Macron – a Centrist - has been backed by the German Social Democrats. However, Merkel’s conservatives in the Bundestag lower house of parliament and many Germans are concerned that any attempt to mutualise debt with other European nations with less budget discipline would mean them footing the bill for other governments’ failures.
Should this initiative be agreed upon by the end of June, savers’ confidence would increase, and we could see the euro strengthen. Personally, I think the increasing Nationalist movements in Italy and Hungary, as well as uncertainty in Spain and Greece, will delay the date by which a deal is agreed.
The Eurozone economic calendar is headlined by German ZEW indicator of investors sentiment – reflecting on the share of investors that are optimistic and the share of analysts that are pessimistic - which is expected to deteriorate further in April falling to -0.5 from a reading of 17.8 in February just within two months.
The Eurozone inflation data is due on Wednesday at 8am GMT, but inflation very rarely deviated from expectation and this time it is set to increase 1.4% over the year in March with core inflation stripped of food and energy prices rising only 0.9% year on year, unchanged from previous months and well below the ECB 2% inflation target.
On Friday and Saturday, the IMF will hold a meeting with its members. Managing Director Christine Lagarde is expected to comment the ongoing trade war between the US and China and will most likely drop hints for EU members. Because of this, expect a volatile week for the euro and as developments unfold throughout the week be sure to get in touch.
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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