The ECB have another round of decision making to consider, will Draghi introduce further QE to the Eurozone?

How will the Euro fare in the run up to the ECB interest rate decision?

August saw events in the Eurozone largely relegated to the background when discussing GBP/EUR exchange rates. Not simply because the first look at UK performance information post-Referendum was on the tip of everyone’s tongues, but with the holiday period and the number of bank holidays recorded across the Eurozone, economic activity and therefore news is lower than normal.

Now we have entered September this will likely change quite quickly. Today we will see individual looks at German industrial production, as well as French trade data. Whilst now major market movers, these will give good indications for the same data averaged for the Eurozone as a whole to be collated and made available for viewing next week. So if you have a Euro buying or Euro selling requirement in the short-term, I recommend contacting your account manager this morning to discuss that the results there and whether this may translate into any potential opportunities for your transfer in the short-term.

European Central Bank interest rate decision and the Euro

Tomorrow one of the headline events for the month will be the ECB’s interest rate decision. Whilst no change is expected in interest rates in the Eurozone, markets are eagerly awaiting the tone and language used in the monetary press conference later on in the afternoon.

Mario Draghi, the head of the European Central Bank, is getting close to another crunch decision. He has been using monetary stimulus in the form of quantitative easing for years now with little to show for it. Inflation has been close to zero for over two years, so Draghi is highly likely to lengthen QE for a second time beyond the current end date of March 2017, and above the current target of €1.7trillion.

80% of economists expect such an extension according to a recent poll conducted by Bloomberg, and the language tomorrow will give speculators an opportunity to second guess when this announcement may come out. Certainly with the Brexit vote the incentive to show that you will be protecting the health of the Eurozone’s economy has heightened – will markets be receiving an early surprise? Any nod to future policy extensions could weaken the Euro heavily as it has done in the past.

With so much down to the personal inclinations of Draghi it is difficult to second-guess how the value of the Euro may play out tomorrow afternoon. In this situations it is best to be in a position to move quite quickly should any tempting opportunities emerge. With a day until the event itself, I strongly recommend that anyone with a Euro buying or selling requirement should detail this to their account manager in order to be informed immediately should any tempting opportunities emerge.

We could see further movements for the Euro on Thursday, keep in touch with your currency broker if you have an upcoming currency transfer to make on 01494 725 353.


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