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Posted April 14th, 2014 by Charles Purdy

Euro knocked by concerns over the Ukraine

The euro enjoyed a reasonable week last week gaining a little bit of ground against sterling and the US dollar. However we have seen a fall this morning over concerns in the Ukraine.

Today we have the release of industrial production data for the Eurozone, where the consensus currently expects a small positive figure of +0.2 which at least compares favourably to the surprise negative figure from January of -0.1. This week we are also expecting inflation data out on Wednesday, which is a key data set which is taken into account when the European Central Bank (ECB) forms its monetary policy. An unimpressive number could potentially increase pressure on the ECB to loosen its monetary policy, especially given criticism that the ECB is ‘all talk, little action’.  There is no data of note released towards the end of the week.

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Posted April 11th, 2014 by Charles Purdy

Euro benefits from ECB inaction

Events in the Eurozone proved to be something of a damp squib this week, failing to affect the performance of the single currency as it continues to trade in a fairly narrow range against sterling. Movements in major rates were largely dictated by events elsewhere. Sterling strengthened against the euro early in the week following better-than-expected Manufacturing data, whilst the euro gained against the US dollar mid-week following the release of Meeting Minutes from the US Federal Open Market Committee (FOMC). Whilst market chatter remained active and speculation abounds regarding whether the European Central Bank (ECB) will cut interest rates further or start a programme of quantitative easing, the single currency itself remained remarkably stable.

Posted April 10th, 2014 by Charles Purdy

Euro steady against sterling

Euro rate movements were very limited yesterday, with impetus for rate changes coming from elsewhere. German Trade Balance data revealed slightly less export demand than was expected from the Eurozone’s largest economy, but the effect of this was not noticeable on the euro overall.

Today sees the release of French Industrial Production data in the morning. Industrial Production data can have a considerable effect on the performance of a currency as seen earlier this week when sterling appreciated against a number of major currencies following the release of better than expected data. This will be followed by the European Central Bank (ECB)’s Monthly Bulletin, which reveals the statistics that the ECB took into account when making their most recent interest rate decision, and provides general information on the economic outlook of the eighteen-nation bloc.

Posted April 9th, 2014 by Charles Purdy

Eurozone strengthens against the US dollar

The euro had another reasonably strong day despite the absence of little in the way of positive data from the Eurozone. The single currency strengthened further against the US dollar as the interbank rate again rose above 1.38. However, the euro depreciated against sterling, as did other major currencies, as a result of strong UK manufacturing data.

Concerns are growing that the euro is currently overvalued and that this is having a negative effect on the recovery of the eighteen-nation bloc. These sentiments were espoused by the Belgian Finance Minister Koen Geens as he expressed worry that a strong euro is harming his nation’s export prospects.

Posted April 8th, 2014 by Charles Purdy

ECB chatter supports the euro

The euro saw reasonable, if unspectacular, performance yesterday as trader confidence in the single currency increased moderately. European Central Bank (ECB) Board Member Yves Mersch indicated that the deflation risk in the eighteen-nation bloc is contained, dampening expectation of a spree of bond-buying or further interest rate reductions. This caused the euro to strengthen against a number of major currencies. There were no hugely influential data releases from the Eurozone yesterday. As such, sharp movements in rates were limited.

Today, data releases are similarly limited from within the Eurozone, so events elsewhere are likely to have a stronger bearing on euro rates.

Posted April 7th, 2014 by Charles Purdy

Eurozone data should highlight key differences between member states

The euro had a more settled day on Friday of last week as German Factory orders came out as expected and little else was released in the way of influential data from the Eurozone. Rates against sterling and the US dollar remained relatively stable following the movement that we saw on Thursday after the European Central Bank (ECB) press conference.

The early part of this week is set to be generally quiet in terms of releases from the eighteen-nation bloc. Industrial production data is due out today followed by Frances on Thursday. It is expected to show quite a contrast with Germany continuing to power ahead and Frances hardly growing.

Posted April 4th, 2014 by Charles Purdy

Euro weakens as ECB ponders quantitative easing

The euro had a mixed start to the week as data releases from the Eurozone were varied. On Monday, positive growth figures from the German Retail Sector buoyed the performance of the single currency and caused it to strengthen against both sterling and the US dollar. Improvements in rates were tempered, however, by the flash inflation estimate from the Eurozone, which put inflation in the eighteen-nation bloc at 0.5% – this was 0.1% lower than expected.

The single currency fared moderately well in the lead up to the most highly anticipated event of the week, which came yesterday in the form of the European Central Bank (ECB) press conference.

Posted April 3rd, 2014 by Charles Purdy

Will the ECB surprise the markets?

The euro had a generally weak day yesterday, dropping against the majority of its trading partners. This was partly due to the European Central Bank (ECB) Vice President Vitor Constâncio stating that ‘the prospects for inflation are a cause for concern’ as inflation data for March had slowed to 0.5 per cent in March – the lowest level in over four years. Constâncio also said that recovery in the region is still very much exposed to negative effects outside the Eurozone. It wasn’t all bad news however, as he also mentioned that April’s figures are expected to ‘correct’ the drop in March, adding, “We see no deflation prospects, that this regime of low inflation could lead to real deflation.

Posted April 2nd, 2014 by Charles Purdy

Eurozone employment data slightly better than expected

Better-than-expected employment data caused the euro to perform well yesterday, as we saw moderate appreciation against both sterling and the US dollar. German unemployment figures revealed a decrease in the number of people not in employment for the fourth month running, which had a positive impact on euro performance. Similarly, the rate of unemployment for the Eurozone as a whole was revealed to be marginally better than expected, at 11.9% for the month of March – a 0.1% reduction in rate from February. Expectations of an interest rate change have largely subsided in recent weeks, but key economic indicators such as unemployment figures continue to have a notable impact on euro rates.

Posted April 1st, 2014 by Charles Purdy

Euro hold steady even though inflation fell

Yesterday was a mixed day for the euro as better-than-expected data during the morning – in the form of positive growth figures from the German Retail Sector – buoyed the performance of the single currency and caused it to strengthen against both sterling and the US dollar.

Gains in rates were tempered, however, by the flash inflation estimate from the Eurozone, which put inflation in the eighteen-nation bloc at 0.5%. 0.1% off an expected 0.6%. Rates of inflation have an effect on euro rates as they are, generally speaking, positively correlated with central bank interest rates. There was, however, consolation in the fact that core inflation stayed relatively unchanged as the market did not seem to perceive the lower-than-expected inflation level as strong enough to push the European Central Bank (ECB) towards more monetary easing.

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