Euro Continues Its Rally

These announcements were largely expected, however during what is a particularly volatile time in the markets it provided impetus for both currencies to show minor gains against the U.S dollar. Despite news that Greek unemployment has now reached the highest levels in the E.U (higher now than Spain) at 26.8%, the Euro continued to strengthen slowly against the pound at it has been doing over the last few months.

Elsewhere in the world Japan announced a 10.3 trillion Yen/ £72 billion pound stimulus package in an attempt to revive its economy. Hurt buy a dip in exports and global demand, the world’s 3rd largest economy had contracted in both previous quarters, and this package is hoped to create jobs and stimulate growth. This is likely to further weaken the JPY which has dropped 12% against the USD since November last year, however this will no doubt stimulate increased exports as prices for foreign purchasers reduce with the exchange rate. Interestingly part of this problem has been caused by a slowdown in demand from the U.S and Eurozone but perhaps more importantly China- Japans biggest trading partner. With demand from the U.S and Eurozone likely to be slow in the short term it is key for Japan to repair trade links with China if they are to boost their flagging economy. Could the economic problems experienced in Europe and the West be spreading to Japan and the East?

Today sees little in the way of major market releases, most notably later today we have the National Institute of Economic and Social Research GDP data, which provides an estimate of growth for the last 3 months. Released a month before official figures this report is highly influential and will influence UK monetary policy. Analysts are predicting a minor contraction of 0.1%, and whilst although this is not an entirely bad figure, its impact on the pound may be exacerbated during these volatile times.

Should you have any transfers coming up make sure you speak to your Currency Index broker to make sure you stay ahead of the markets.