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Posted April 30th, 2014 by Charles Purdy

Euro weakens over low inflation worries

The euro took a sharp tumble yesterday as a result of worse-than-expected inflation data coming out of Germany. Figures came through detailing an inflation rate of 1.1% in the Eurozone’s largest economy, 0.2% less than median predictions. When the figures came through around lunchtime, we saw the single currency weaken sharply, heading back up towards 1.22 against sterling and down to 1.38 against the US dollar.

The poorer performance of Germany in terms of consumer inflation has raised doubts over whether today’s Eurozone Flash Consumer Price Index (CPI) data will reach earlier predictions of 0.8%. Should the CPI data fail to reach this, it is likely that we will see further euro weakness as investor concerns mount regarding continued low interest rates. European Central Bank (ECB) President Mario Draghi may have alleviated some of the imminent fears of asset-buying in a private address yesterday; however, it is likely to take a more public assertion to deter traders from reacting should we see low CPI figures this morning. Whilst uncertainty remains, sharp movement in euro rates remains likely.

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Posted April 29th, 2014 by Charles Purdy

Inflation data key to Euro’s short term movement

While there was some sporadic movement in euro rates yesterday, net shifts were relatively limited. As yet, traders seem unsure of where to position themselves ahead of the all-important mid-week inflation data. I even heard on the radio this morning a commentator forecasting that the euro would weaken by 10% over the coming months. Extreme in my view but it may prove to be right!

Today’s German Consumer Price Index data (CPI) may have a more decisive impact on the performance of the single currency given that the data from the Eurozone’s largest economy will give a strong indication as to how tomorrow’s Eurozone CPI figures come out.

Posted April 28th, 2014 by Charles Purdy

This week’s Eurozone inflation data could hit the euro

The euro had a quiet day on Friday last week as rates remained relatively static ahead of the weekend. As Italy enjoyed another bank holiday, there was little in the way of influential data released from the Eurozone, and we did not see any more of the fluctuations seen earlier in the week. The biggest data release this week is the Flash Eurozone Consumer Price Index (CPI) figures, which are due out on Wednesday morning. These figures are a key indication of inflation in the eighteen-nation bloc and, as negative interest rates and/or quantitative easing remain a real possibility, these figures have the potential to have a significant impact on the euro.

Posted April 25th, 2014 by Charles Purdy

Euro lacks direction

The main data out from the Eurozone this week was on Wednesday, with positive flash purchasing managers’ index figures coming out at a higher level of growth than expected. The single currency gained ground against sterling throughout the majority of Wednesday but stayed steady against the US dollar by the end of the day; the positive data was largely driven by Germany. Late on Thursday afternoon, European Central Bank (ECB) President Mario Draghi said that the ECB could potentially start broad-based asset purchases if inflation does not improve – if this occurs, it would be one of the more extreme policies the ECB has ever implemented.

Posted April 24th, 2014 by Charles Purdy

Euro benefits from better than expected data

A host of positive data from the manufacturing and services sectors across the Eurozone spurred improvements in euro rates yesterday. Flash Purchasing Managers’ Index (PMI) figures for the eighteen-nation bloc detailed a higher level of growth than expected in both sectors. The better-than-expected data sets come largely as a result of a strong performance from Germany, the Eurozone’s largest economy. The euro gained ground against sterling through most of the day, while gains made against the US dollar were largely reversed by the evening. The euro could perhaps have strengthened further given the strength of yesterday’s data; however, whilst the threats posed by low interest rates remain, the single currency seems to be struggling to strengthen more notably against other major currencies.

Posted April 23rd, 2014 by Charles Purdy

Eurozone awaits key manufacturing data

There was not a great deal of movement in euro rates yesterday as most of Europe returned to work following the bank holiday weekend. The single currency weakened slightly against sterling as a result of speculation surrounding the UK Monetary Policy Committee (MPC) Meeting Minutes due out today.

From the Eurozone today, we await Flash Manufacturing Purchasing Managers’ Index (PMI) figures from across the Eurozone. As the escalating situation in Ukraine continues to pose a threat to the Eurozone recovery, today’s figures should give a strong indication as to how well the manufacturing sector is faring. Figures are predicted to show growth in the sector, but it is expected to be at a reduced rate.

Posted April 22nd, 2014 by Charles Purdy

Eurozone data key to ECB actions

The euro lost some ground just before the bank holiday weekend as the German Producer Price Index (PPI) came out worse than expected. The PPI is a key indicator of levels of consumer inflation – which has been a key concern for the European Central Bank (ECB) of late. Low levels of inflation have been putting pressure on the ECB to either reduce interest rates further or increase stimulus in order to prevent deflation. Both of these would have a negative effect on the single currency, thus Thursday’s figures caused some weakening.

The first data releases to watch this week are the Manufacturing data sets due out on Wednesday.

Posted April 17th, 2014 by Charles Purdy

Euro continues to have worries over the Ukraine

The euro started the week by weakening against the majority of major currencies, most notably a resurgent sterling. The situation in Ukraine has been dominating news headlines this week and the effects of this on the single currency have been negative, if somewhat limited so far. European Central Bank (ECB) President Mario Draghi sought to prevent the euro from strengthening further against the US dollar, stating that he would increase monetary stimulus should we see continued euro strength. Draghi’s guidance quelled the strengthening of the euro in the short-term, however it is likely to take more than mere posturing to have considerable impact on the euro’s fortunes.

Posted April 16th, 2014 by Charles Purdy

Euro unaffected, as yet, by problems in Ukraine

Yesterday was a quiet day for the euro as it remained relatively stable against the US dollar – hovering around the 1.38 mark – and weakened slightly against sterling. German Economic Sentiment data came through weaker than expected, highlighting the more sceptical outlook from analysts in the Eurozone’s biggest economy. This failed to have much of an immediate effect on euro rates yesterday, although these worries may have a greater effect in the long-term if concerns by analysts over the escalating situation in Ukraine and continued slowdown in Chinese growth are justified.

Eurozone Consumer Price Index data is due out today, which has the potential to affect the performance of the single currency.

Posted April 15th, 2014 by Charles Purdy

ECB keen to see a weaker euro but “only words” not enough

The euro has started the week on its back foot and experienced moderate weakening against a number of major currencies due to the problems in the Ukraine. Poor euro performance was also a result of remarks by European Central Bank (ECB) President Mario Draghi. A number of key economists have raised concerns that the single currency is currently overvalued, thus inhibiting the Eurozone’s export growth. These concerns were echoed by Draghi as he threatened increased monetary stimulus if we see further euro strength. Euro appreciation has been substantial and – in the view of many – unwarranted over recent months. Draghi’s guidance quelled the strengthening of the euro in the short-term, however it is likely to take more than mere posturing to have a more considerable impact on the euro’s fortunes.

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