Services and Manufacturing data is due for release on Thursday at 09:00 which is likely to have an effect on Euro exchange rates. The Euro report below looks at what effect this could have in the current European climate. 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 week.

Currency Pair% ChangeDifference on £200,000

Will the sell-off in Italian assets spill over into the Euros value?

Despite European stocks approaching a 4-month high, the Italian stock market is coming under substantial pressure owing to the political uncertainty the coalition between 5-Star and League is causing.

Not only has the stock market (Borsa Italiana) come under pressure (down over 2% yesterday at one stage) recently, but borrowing costs have surged also just demonstrating how the markets are concerned about the coalition.

The 5-Star Movement and League are in the process of choosing their Prime Minister, widely expected to be Giuseppe Conte who plans to cut taxes in the Billions, provide additional welfare spending and he also seeks to roll-back pension reforms.

Eurozone Health News Next Week

The reason for the market reaction is because the thought of such a spendthrift government has shook markets, as Italy is the Eurozone’s third largest economy and also its most indebted after Greece.

If Italy had its own currency like the UK for example, I would’ve expected to see a steep slide in its value, and I wouldn’t be surprised to see the issues spread to the Euro once everything is made official. Although perhaps not to such a great extent due to regions strength as a bloc.

Another reason for the concerns surrounding this matter is the populist outlook of both parties forming the coalition. There appears to be a split in the thinking within the Eurozone, and some are predicting that this government could move Italy away from the EU’s direction which would of course be a major concern, as the UK is already in the process of leaving the EU.

Key economic release for the Euro this week

The health of the Services and Manufacturing sectors will be covered on Wednesday at 9.00am which could cause movement for the markets, especially if the data released deviates from the figures expected. Clients as well as potential clients can feel free to get in touch to discuss the expectations along with the expected market reactions.

On Thursday there will be a Eurogroup meeting. There will be a large amount of key EU personnel attending such as the finance ministers of each member state along with Mario Draghi, the European Central Bank (ECB) President. I would expect any major announcements to result in movement for the Euro, especially comments regarding changes to the current economic policies outlined by the ECB.

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.