Busy week comes to a busy end

A very busy week on the currency markets draws to an end today with plenty of action before those closing bells are due.

In pure data terms we have already started with German PPI and French PMI figures coming in lower than anticipated, which has seen the already weak Euro drop off further. Next up we have German and overall European PMI figures before the UK gives us public sector net borrowing and retail sales. The Europeans are expecting a slight improvement in both of the upcoming PMI releases, but if this morning’s trend continues with bad results, then expect the Euro to come under further pressure. Public sector net borrowing and retail sales are both expected to be down in the UK, one obviously a negative and one a positive. Watch for any variance on these expectations to see if Sterling will be able to consolidate the early morning gains against the Euro.

Very little data is due out later today, with US PMI and Canadian retail sales the only releases of any note due out on the other side of the pond. Both are due a drop, but neither is likely to be a big game changer.

In the background or forefront depending on your positioning or requirement the market’s focus is still locked on the situation with Greece – another Eurogroup meeting is due today, with the Greek’s latest ‘take it or leave it’ loan extension suggestion having already been dismissed out of hand by the Germans. It is looking increasingly likely that there is not going to be an agreement reached, with Greece’s parliament today due to start voting in changes to their social bills, which if passed, would directly flout their bailout obligations. Neither side seem in the mood for any concessions from their current positions, so it seems like the Greeks will default, the Germans will get angry, and the Euro could lose a member.

Whether this is a good thing or a bad thing is hard to see at the moment. So much negativity is already priced in to the Euro, that there is actually a chance that once all of the confusion and uncertainty is removed, the markets might realise that the Euro herd is stronger without the weak Greek wildebeest!

For you Euro buyers the rates are currently sitting bang on the 7+ year highs we recently recorded, so maybe now is the time to join the herd and consider booking your requirement on a forward contract, and for those of you considering looking a gift wildebeest in the mouth and holding out for further gains, don’t forget the spectre of the upcoming UK general election is likely to add uncertainty and ultimately significant Sterling weakness, as a change in political position during such an economically sensitive time is never a good thing.

Through it all make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and what your options are.