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Posted September 30th, 2013 by Charles Purdy

Political problems in Italy reignite worries

The euro performed reasonably well on Friday on the back of German inflation data, which showed levels of inflation to be at a three month low. This has helped to create positive conditions for German consumers and bode well for the Eurozone recovery. Despite Fridays more positive one, the euro has started this week on the back foot, as markets are nervous that we could see the a credit rating agency downgrade for Italy as the Italian government could be near collapse following Silvio Berlusconi’s decision to remove five ministers from government. You can expect the markets to remain nervous ahead of the confidence vote on Wednesday. The European Central Bank’s interest rate decision on Wednesday and following press conference could well be influential although no change is expected so it will be the following press conference that will have the most substantial effect as investors look for clues as to the outcome of future monetary policy decisions. Other events likely to play a role in determining euro performance include today’s flash Consumer Price Index figures for the Eurozone. These are a key indicator of inflation. Another key indicator is seen on Friday when Germany releases its monthly Producer Price Index data. Following last Friday’s positive data, expectations will be for reasonable figures to bolster the single currency. Call your trader now to see how the euro fares this week.

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Posted September 27th, 2013 by Charles Purdy

Mixed messages highlight Eurozone uncertainty

The euro fluctuated within a relatively narrow range this week in response to mixed data. The week started poorly for the single currency as French and German manufacturing data came through worse than expected – showing contraction for the French sector. European Central Bank president Mario Draghi also dampened performance by hinting that there may be a need for further refinancing operations in future. If further refinancing is needed this is likely to have a negative effect on the euro, although the effect of this announcement was limited by Draghi’s stand-off approach. The euro’s performance improved during Tuesday and Wednesday as first Business Climate data and then Consumer Confidence data both proved to be strong – with consumer confidence at its highest level since the 2008 crash.

Posted September 26th, 2013 by Charles Purdy

German consumer confidence buoys the euro

The single currency experienced a reasonably positive day yesterday as German Consumer Climate data climbed to its highest point since the 2008 crash. These figures were widely expected and caused the euro to see little in the way of appreciation against sterling, however the survey of German consumers in conjunction with poorer data emanating from the USA did cause steady gains to be made against the US dollar. This morning sees the release of Eurozone Money Supply data from the European Central Bank. These figures detail the total quantity of euros in circulation and deposited at banks. A greater increase in money supply would bode well for the currency as a boost in supply is usually closely correlated with central bank interest rates.

Posted September 25th, 2013 by Charles Purdy

Euro has a steady day

Yesterday was a quieter day for the seventeen-nation currency as the euro traded within a narrow range against its major trading partners. German Business Confidence data – which is compiled by surveying business leaders across the Eurozone’s largest economy and is a leading indicator of economic health – came through slightly weaker than expected, but still represented an increase on the previous month and in fact showed figures are at their highest level since April 2012. As a result the single currency showed little net movement over the day against sterling and the US dollar despite some small fluctuations. Today further German data is likely to have a bearing on euro performance.

Posted September 24th, 2013 by Charles Purdy

Euro undermined by disappointing economic data

The euro weakened moderately against major peers yesterday in response to weaker than expected manufacturing data sets and comments from the European Central Bank (ECB) president Mario Draghi. Both German and French manufacturing data were worse than expected with the French figures showing contraction and the German figures showing less growth than expected. Draghi disclosed that he was prepared to implement another Long-term refinancing operation – which essentially means another spate of lending to the banks of the Eurozone – in order to maintain current monetary policy. Such an operation, if implemented, would have a negative effect on the single currency.

Posted September 23rd, 2013 by Charles Purdy

Chancellor Merkel re-election should be positive

Chancellor Merkel has been re-elected in Germany which is positive for the Eurozone. This should also be good news for the euro. However there does seem to have been a concerted effort to keep bad Eurozone news “out of the spotlight” for the last six months and over the next few weeks and months we are likely to see requests for additional funding for Greece, Portugal and others. We also have the likelihood of some of the banks having to be bailed out as there is be a detailed review of bank finances prior to the formation of a European wide banking regulator and there has so far been a lack of effort in the Eurozone to recognise the depth of the bad debt problem at some of their banks.

Posted September 20th, 2013 by Charles Purdy

Euro awaits the German elections

The euro started off Monday on an impressive note. However later on in the week it struggled despite the release of much better than expected German and European investor optimism figures which showed German optimism had jumped to 49.6 whilst European optimism as a whole rose significantly to 58 from 44. The Euro really took a back seat in yesterday’s trading session with the headlines coming from the US Federal Reserve meeting and the poor UK retail sales data. Following both of these unexpected results the Euro gained in the markets as investors looked to move their assets elsewhere. Whilst the Euro was not wholly responsible for these gains it did breach a previous seven month high as it rallied up to 1.3530 against the US dollar late Thursday afternoon. This weekend we have the German election. Chancellor Merkel is expected to remain in power but the structure of her coalition could change which will influence some of the nuisances of German policy towards the Eurozone which could have a significant effect on how the euro performs next week. Call now for an update.

Posted September 19th, 2013 by Charles Purdy

Euro awaits German elections

The euro had a quiet day yesterday in contrast to its major peers although it showed significant gains against the US dollar following the surprise announcement from the Federal Reserve not to start reducing their programme of quantitative easing. Little by the way of influential data was seen to emanate from the Eurozone, so movements in euro pairings were largely dictated by events elsewhere. The single currency had traded within a narrow range against the US dollar during the day, whilst sterling strengthened against the euro to reach its highest point since mid-January. The fortunes of the seventeen-nation currency are likely to be dictated by events outside of the Eurozone for the rest of the week as we expect a heavy concentration of important influences  from elsewhere, but very little from the Eurozone itself. However we should not discount the German election this weekend as it could be a significant factor on euro movements in the short to medium term. Call in now to see how the euro reacts to these influences.

Posted September 18th, 2013 by Charles Purdy

Euro holds its own

The euro struggled somewhat yesterday compared to Monday’s more impressive display. This was despite the release of much better than expected German and European investor optimism figures which showed German optimism had jumped to 49.6 whilst European optimism as a whole rose significantly to 58 from 44. It would appear that despite concerns about Syria and weak European growth investors are appearing evermore optimistic, possibly because of the promise made by the ECB president to do ‘whatever it takes’ to save the euro which appears to be giving economic activity a much needed boost. Today we have a very quiet day ahead with all eyes focusing on the Bank of England minutes and in the Federal Open Market Committee’s (FOMC) meeting in the US; call in now for a live update on the market.

Posted September 17th, 2013 by Charles Purdy

Will German business confidence sentiment support the euro

The euro pushed up yesterday to nearly a 3 week high against the US dollar and whilst this was mainly down to US dollar weakness, it is also a sign that the markets seem to have put to one side the “euro-crisis” for now. News from the Eurozone was pretty flat with CPI figures coming in as expected at 1.3% and in line with last month’s result. With the reading coming in beneath the ECB’s targeted 2% it could be a sign that the Euro zone is hitting a period of stability. The German stock markets rallied to record highs on the back of reduced Syrian tensions following the US/Russian talks over the weekend. Today we have only one data release from Europe in the form of the German ZEW Business Confidence sentiment, a poll from 350 German institutions and their 6 month outlook for Europe’s largest economy. Call in now for the latest news on the euro.

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