Mario Draghi is due to speak tomorrow and investors will be awaiting potential updates on the future of Quantitative Easing in the EU. This speech has the potential to affect the Euro depending on his stance. The table below shows the difference in Euros you could have achieved when buying £200,000.00 during the high and low points during trading on Tuesday.

Currency Pair% ChangeDifference on £200,000

German budget spells trouble for Eurozone

German finance minster, Olaf Scholz has caused quite a stir in the Eurozone after making it clear Germany is committed to a blueprint of austerity.

Scholz surprised the markets by proposing a cut in investment and also a cut in defence spending. There will be a halt on development aid and one that will definitely not sit well with the Eurozone, the lowering of Germany’s contribution to the next EU budget.

Donald Trump may also not be a happy bunny.  Trump had urged Germany to increase the percentage of GDP to the US-led NATO alliance which Germany have gone against. There could also be further reasons for concernas the EU’s exemption from US aluminium and steel tariffs is due to end next month.

Italian Government Budget

Presenting the budget Scholz said “I am convinced , in good economic times , a responsible fiscal policy must achieve both a reduction in debts and a rise in investments.”

Wolfgang Munchau of the Financial Times has said that the German budget has greatly increased the likelihood that the Eurozone will break apart.

The fear for Germany is that Euro zone reform will involve the pooling of all Euro zone debt and that as the most affluent member of the Euro zone Germany would have to pick up the debt of smaller, more struggling Euro zone members.

Scholz’s plan is to eradicate all of Germany’s public debt to pull Germany away from any debt pool scenario.

Keep a close eye on developments as this situation does have the potential to have big ramifications for the Euro.

ECB Draghi speech could give hint to QE plans

Mario Draghi, the President of the European Central Bank (ECB) is due to speak tomorrow. Investors will be watching keenly to see if any hint is given to future monetary policy, particularly the ECB’s stance on Quantitative Easing. (QE)

QE is where a central bank injects money into a struggling economy in order to stimulate growth.

The ECB currently puts €30bn into the Euro zone per month. If this is cut the Euro could see substantial gains. It was rumoured earlier in the year that QE could end in 2018, but Draghi’s optimism has dampened of late. He has cited struggling inflation as the cause for concern in cutting QE.  If Draghi gives any indication as to the future of the ECB’s QE program we could see volatility in the market.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.