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Posted March 31st, 2014 by Charles Purdy

Key data could force the ECB’s hand on interest rates

A busy week for Eurozone data starting today with the release of the “flash” inflation figure for March which is expected to show a fall to 0.6%. This will obviously be of concern to the European Central Bank (ECB). Tomorrow we will see the release of the Manufacturing Purchasing Managers’ Index (PMI) and unemployment data for the Eurozone. These are then followed on Wednesday by the Services Purchasing Managers’ Index and retail sales figures..

The big event of the week is likely to be the interest decision published by the European Central Bank (ECB) on Thursday. Although worries about possible deflation and the speed of the recovery in certain Eurozone countries, any change by the ECB on Thursday is considered unlikely. So any different outcome will have a significant effect on the euro.

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Posted March 28th, 2014 by Charles Purdy

The Euro has a difficult week

The common currency has weakened this week, much in line with the intention of the rhetoric communicated by the European Central Bank (ECB), even though it has been debated that their actions are too ‘weak’. The main development in the rhetoric came from the German Bundesbank who seem more inclined to consider Quantitative Easing (QE) than previously, a measure they have consistently criticised in the past. Quantitative Easing has a direct weakening effect on currency and the statement is likely one of the drivers for the slight euro slide noticed this week. Positive retail data out of the UK yesterday saw the euro reach a three week low against sterling.

Posted March 27th, 2014 by Charles Purdy

Lack of data sees the euro drift

With no data releases yesterday for the common currency, the euro traded slightly lower throughout the day against both the dollar and the sterling. As mentioned earlier in the week, the euro seems to become increasingly insensitive to European Central Bank (ECB) rhetoric, with BNP Paribas claiming that ‘policymakers’ inaction speaks louder than weak words’.

Today tells a similar story, with no news from the Eurozone. However, given that there will be significant data sets out from both the UK and the US, there is potential for relative movement in the euro against sterling and the US dollar.

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Posted March 26th, 2014 by Charles Purdy

Poor German Business Climate data worries the Eurozone

The common currency had a busy day yesterday. Initially punished by poor German Business Climate data, the worst since October of last year, the euro weakened against other major currencies, its fate hung in the balance as investors anticipated the afternoon’s speech by European Central Bank (ECB) President Mario Draghi. The ECB has provided additional forward guidance in its recent communication. It has been made clear that it wants a slightly weaker currency to stimulate growth within the Eurozone. However, Draghi’s words yesterday were seen as too weak by markets. Although he once again hinted at the possibility of negative short-term interest rates, it is a familiar promise, and investors did not appear to place too much stock in it.

Posted March 25th, 2014 by Charles Purdy

Mixed Eurozone data surprisingly supports the euro

Yesterday morning we saw the release of both the services and manufacturing purchasing managers’ indices for the euro-zone. These help to indicate productivity in the services and manufacturing industries, which in turn contribute to perception of a country’s economy. European manufacturing data was as forecast whilst services data disappointed slightly. When looking at the breakdown, Germany, the economic backbone of Europe, disappointed, which is always cause for concern. On the other hand, French data surprised by pulling above the key 50 mark, which shows that the sector is growing rather than contracting. The market initially traded the euro lower on the release, but as the day progressed confidence was somewhat restored and the euro regained most of its losses and even saw good gains against sterling and the US dollar post 5pm.

Posted March 24th, 2014 by Charles Purdy

Eurozone worries over the Ukraine may impact the euro

The euro finished off the week trading in a tight range against other currencies.. This was mainly due to the lack of significant data releases out of the Eurozone on Friday.

Today we have the release of the flash manufacturing- and services purchasing manager indices for March for the Eurozone as a whole, as well as from France and Germany individually. Any surprises here could also significantly impact the euro especially given the worries of what is happening in the Ukraine. On Tuesday we have the  release of  the German Business Climate Index and at the end of the week similar sentiment data for the whole of the Eurozone.

Posted March 21st, 2014 by Charles Purdy

Eurozone worries about the Ukraine

The euro traded relatively flat during the start of the week, despite some disappointing investor confidence data from Germany and with only minor data releases otherwise. Traders also seemed cautious to act too strongly on any rhetoric regarding the Ukraine crisis and possible sanctions from the west, resulting in minimal impact on currency movements.

Mid-week invited more movement as we saw the budget speech in the UK and a statement from the US Federal Open Market Committee (FOMC). The markets viewed both positively enough to strengthen against euro late on Wednesday, with the euro getting knocked down from its highs against the US dollar.

Posted March 20th, 2014 by Charles Purdy

Euro loses ground

With no significant data out of the Eurozone, performance for the single currency was mixed yesterday. The most significant movement was seen against sterling, with positive unemployment data from the UK resulting in it strengthening against the euro throughout the day. The euro also lost ground against the US dollar, with the dollar strengthening following the statement from the Federal Open Market Committee (FOMC). While comments by Russian President Vladimir Putin have stabilised market responses to the Crimean crisis, there is fear that renewed Russian aggression could harm the euro.

With a quiet day ahead in the Eurozone, unemployment claims from the US are likely to cause the most market movement.

Posted March 19th, 2014 by Charles Purdy

Euro holds its own despite economic worries in Germany

Despite some disappointing investor confidence data from Germany, the euro traded relatively flat yesterday, with the exception against sterling, where we saw euro strength. The result was the weakest sterling level against the euro since late December, mainly due it seems to sterling weakness rather than euro strength. Investors are still keeping their eyes out for any rhetoric from EU officials on the Ukraine crisis as the indications of risk will drive market movements.

Markets are currently confused about how the EU plans to deal with the Crimean issue, given contradicting statements from different states leaked out into the media. For this reason, the market seems to perceive any potential sanctions imposed by the EU as rather unproductive or ‘weak’.

Posted March 18th, 2014 by Charles Purdy

Eurozone data disappoints but the euro maintains recent gains

Following a week in which it hit a two-and-a-half year high against the dollar, the euro continued to outperform the currencies of its major trade partners. Inflation data was released from the Eurozone today, which although disappointing did not have a great impact on the markets as an estimate of this was released earlier in the month. As potential market movements due to the referendum in Crimea was priced into the markets last week, recent related events have not had much impact on the euro. Therefore, the single currency was able to maintain its strong position in the absence of any major data releases.

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