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Posted November 15th, 2013 by Charles Purdy

Euro stutters as data disappoints

The euro started the week on a positive trajectory following the significant weakness that had resulted from the European Central Banks (ECB) decision to cut interest rates to 0.25% during the previous week. Euro appreciation can be attributed in part to speculation that the previous week’s depreciation was over-zealous, whilst data continued to be mixed. The fortunes of the single currency altered slightly when we reached Wednesday as an executive board member of the ECB stipulated that both quantitative easing and the implementation of negative interest rates remained possibilities. Following fluctuations in both directions, the seventeen-nation currency is at similar levels to what it was at the beginning of the week against both sterling and the US dollar. However, the high volume of unexpected data and events of late show how hard it is to predict market movements going forwards. Today, Consumer Price Index data for the Eurozone – a key inflation indicator – is set to be released in the morning and may be the catalyst for further sharp movements. Call your trader now to see how you can minimise the risk posed by further volatility.

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Posted November 14th, 2013 by Charles Purdy

ECB worries over deflation undermine the euro

The outlook on the economic health of the Eurozone arguably took a turn for the worse yesterday as an executive board member of the European Central Bank (ECB) stipulated that both quantitative easing and the implementation of negative interest rates remain possibilities. Both quantitative easing and negative interest rates would have considerable negative effects on the performance of the single currency and, according to the board member, are in the ECB’s armoury and could be used to prevent the Eurozone from experiencing deflation. This possibility of further monetary easing is perhaps some way off at the moment, but merely the mention of such an eventuality had a notable impact on euro causing it to fluctuate against the US dollar and depreciate against sterling and the Japanese yen.

Posted November 13th, 2013 by Charles Purdy

The euro regains lost ground

The euro continued to strengthen yesterday, making up ground against the US dollar and strengthening significantly against against sterling following the release of weaker than anticipated inflation data out of the UK. The euros strength came in part due to the continuing belief that last week’s European Central Bank rate cut was over zealous given the data coming from the Eurozone. Today the president of the German central bank is delivering a speech on the current economic health in the Eurozone, which may well have some bearing on the performance of the single currency throughout the day. In terms of data, today’s most notable release in the Eurozone is the monthly industrial production data out this morning and this is likely to cause the biggest reaction in the markets.

Posted November 12th, 2013 by Charles Purdy

Euro rebounds (slightly) from Thursdays weakness

The euro had a much brighter start to the week following last week’s rate-cut-inspired slump. The single currency appreciated at a relatively consistent pace against both sterling and the US dollar. The euro’s “bounce” has come as a result of speculation that the initial weakness following the European Central Bank rate cut was perhaps excessive given the data that has been coming from the region. To the contrary, a Bloomberg survey has predicted inhibited growth in the Eurozone region with mean estimates putting GDP growth at just 0.1%. Investors will have to wait until Thursday to determine the accuracy of this prediction and we can expect a degree of volatility between now and then.

Posted November 11th, 2013 by Charles Purdy

Eurozone data could add further pressure to the euro

The euro had a mixed end to last week, continuing to lose ground to a strong US dollar, whilst recovering a little against sterling. However, despite the marginal strength seen on Friday against sterling, the euro remains under a lot of pressure following the European Central Bank (ECB) rate cut on Thursday. In terms of data, French Industrial Production figures came out much worse than expected, showing contraction rather than growth. Looking ahead to this week, Thursday’s economic releases are likely to have the most impact on the euros rates, with preliminary GDP figures scheduled to be released from a number of European states ahead of the estimates for Eurozone as a whole.

Posted November 8th, 2013 by Charles Purdy

Euro weakens as the ECB worries about deflation

The euro started the week in a relatively uneventful fashion as run-of-the-mill data releases did little to inspire market movements. However, the decision by the European Central Bank (ECB) to reduce interest rates from 0.5% to 0.25% caused the euro to depreciate significantly. There had been some speculation suggesting that interest rates might be reduced, but the majority were of the opinion that such a reduction was likely to take place in December. This unexpected fall meant that the sterling – euro exchange rate shot up and reached its highest level since January, whilst similar movements against the US dollar made this the single currency’s biggest fall in two years.

Posted November 7th, 2013 by Charles Purdy

Will the ECB cut Eurozone interest rates today?

Yesterday was a more positive day for the euro, following a negative start to the week as the single currency appreciated against the US dollar and made moderate gains against sterling. The final Services Purchasing Managers’ Index data was significantly improved, showing reasonable growth in the sector. This was enough to give the seventeen-nation currency a boost and cause some appreciation in major pairings. Performance may have also been influenced by speculation surrounding today’s European Central Bank (ECB) interest rate decision. Influential sources were suggesting yesterday that the ECB would keep rates at 0.5% rather than reduce them to 0.25% as had been speculated.

Posted November 6th, 2013 by Charles Purdy

Euro undermined by poor employment data

The euro adopted a negative trajectory yesterday as the Eurozone’s economic outlook worsened slightly. Its movement against sterling was compounded by the positive data releases from the UK. The day began poorly for the single currency when Spanish unemployment data came through worse than expected. Unemployment has been a consistent problem throughout Southern Europe and figures showing an increase of 87,000 unemployed people over the previous month have undermined the notion of a sustainable Eurozone recovery. Further negativity came as revised Eurozone forecasts were released detailing lower growth and higher unemployment. As the lag in growth from the Southern European states seems to continue to stall the seventeen-nation currency in the short-term, investors will look to Thursday’s European Central Bank (ECB) decision to influence trading activity in the medium-term.

Posted November 5th, 2013 by Charles Purdy

Poor data doesn’t undermine the euro

The euro had a quiet start to the week and did not see any significant movement against sterling. The seventeen-nation currency did fall to a six-week low against the US dollar, before making a modest recovery later in the day. Both Italy and Spain produced manufacturing data that was marginally worse than expected, however both sets of figures did reveal growth, albeit minimal, in each Southern European state which had, if anything, a positive impact on single currency strength. Thursday’s rate decision from the European Central Bank is likely to be the most influential event this week in terms of euro performance as investors wait to see if interest rates are lowered to record lows of 0.25%.

Posted November 4th, 2013 by Charles Purdy

Will the ECB cut interest rates on Thursday?

The euro had a torrid end to the week as Thursday’s slump continued into Friday. The strength of the single currency continued to wane following Thursday’s poor inflation and unemployment data. After an extended period of euro-strength, traders are trying to predict whether the end-of-week performance represented a turning of the tide or merely a blip in the trend. The big event to look out for this week will be the European Central Banks rate decision and following press conference on Thursday. The decision and following release from ECB President Mario Draghi will be all the more important given that on Friday a number of major institutions altered their predictions to reflect their belief that the ECB may reduce rates to new lows of 0.25% in November.

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