Euro rally approaches turning point

14 March, 2014

Rob Bastin

The hot currency topic of late has been the renewed strength of the Euro as it has gained over 2 cents against the pound in the last week and has rallied to a 2 and half year high against the US Dollar. This strength has been driven by a surprisingly confident stance from the ECB who recently dampened any expectations of imminent rates cuts or the introduction of Quantitative Easing. It is however widely expected that such monetary policies will be utilised at some point in the coming months and so the potential for the Euro to turn the corner is very real on a mid-term basis. Shorter term the Euro may well have found its peaks with exchange rates starting to drop off in yesterday’s trading.

Corrections against the US Dollar were aided by strong jobless claims and Retail Sales figures for the US with Retail Sales in particular posting a growth of 0.3% on the year compared to 0.3% contraction posted last month. After positive non-farm payroll figures on Friday and peak levels being reached against the Euro, the dollar is poised for a turnaround in the coming weeks after being so out of favour with traders and investors over the recent months.

We finish the week off today with data due out across all the major currencies. Euro-zone construction output and Employment change are to be released at 9:30am and 10:0am whilst for the UK 9:30am will see the latest Trade Balance figures announced. US Producer Price index figures at 12:30pm and Consumer sentiment at 1:55pm will wrap up the week’s data releases. 

With the markets seeing an increase in volatility at present it is even more important for you and your broker to discuss your upcoming requirements so that we can help you make the most of your currency purchase. Sending money overseas to Europe has become 2% more expensive in the last 2 weeks however many of clients were able to protect themselves from this drop by fixing their rate on a forward contract. For more information on this speak to your broker today!