With political tensions growing across Europe due to the current financial developments coming from Turkey, investors will be considering the outcome of economic releases across the eurozone, to asses the viability of short-term EUR investments. More on the potential impact of the Turkish situation on the single currency in todays Euro report. The table below shows the difference in Euro return you could have achieved when selling £200,000.00 during the high and low trading points of the past week.
|Currency Pair||% Change||Difference on £200,000|
Yesterday saw a number of key economic releases which could provide confidence in such investments and lead to some positive Euro movement this week. Gross Domestic Product figures (GDP) released for Germany and the Eurozone, both saw similar increases of 0.1%, despite expectations that there would be no deviations in the data, based on the previous quarter.
In addition to this, the surveys released by the ZEW Centre for economic research, surrounding the economic sentiment for Germany and the Europe, both provided optimism which was in complete contrast to the previous publications released only a couple of months ago in June.
The ZEW surveys are regarded as significant in relation to the currency markets, as they provide qualitative data from around 300 economists and analysts which is used as an indicator of the economic future for the next 6 months.
Despite this, the outcome of the European industrial production data for June, was worse than expected, with a result of -0.7%, which is a far cry from the previous of 1.3%, which is likely a symptom of the current trade wars that are affecting global markets.
The outcome of yesterday’s data could however provide confidence in the short-term strength of the EUR and attention will now turn to the eurozone inflation data released on Friday.
There have been major currency implications for Turkish Lira following concerns over President Erdogan's economic policies and both trade and diplomatic disputes with the United States.
This has in turn placed pressiure on surrounding economies and currencies that fall under the same ‘emerging market’ currency basket, such as the South African Rand (ZAR).
The EUR has consequently hit one-year lows against the USD of around the mid-low 1.13s, further reinforcing fears of contagion for the European banking sector which could have further ramifications to the currencies strength in the short term.
It could therefore be wise for clients selling EUR to secure their currency sooner rather than later, by way of a forward contract which can be discussed by contacting your account manager.
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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