With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table displays the difference in Euros you would have achieved when buying £200,000 during the high and low points yesterday.
|Currency Pair||% Change||Difference on £200,000|
Inflation data in the Eurozone slumped yesterday to 1.4% compared to this time last year and down from 1.9% for the previous month. The fall can largely be attributed to a fall in the price of energy for April. This is likely to help the Pound regain some of the recent losses it has incurred against the Euro. The reason being, four members of the ECB or European Central Bank last week spoke openly about the need to taper the quantitative easing programme, which normally helps to strengthen the currency in question.
Mario Draghi, head of the ECB played down these talks by stating that the Eurozone economy still required substantial help (QE) in order to reach and sustain its 2% target. Yesterday’s inflation reading helped to solidify his statement and could therefore mean that next week’s policy meeting on June 8th is a non-event. I personally think that this could provide Euro buyers with a short term window of opportunity.
For the remainder of the week, the only worthwhile economic data release will be the Manufacturing Purchasers Managers Index, released first thing this morning, which captures the business conditions of the manufacturing sector. Although this could influence the price of the Euro if this figure comes in less or more than the figure expected, my personal opinion is that investors will now be looking forward to next week’s policy meeting. Therefore, the price of the Euro will be at the mercy of investors moving their funds either to or from the Euro and USD for the remainder of this week. The reason for this, key speakers of the Federal Reserve have openly spoken that there is no need to rush raising interest rates anytime soon and therefore investors are putting money into the Euro from the Dollar to avoid short term losses.
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