Euro strength amidst poor data – are the tables turning

Yesterday was a strange day on the market, and many might say we are now seeing the Euro turn the corner following this month’s major releases. Many of you will be aware or will have seen the huge losses made by the Euro this month across the board following 3 major events. The slide started following the shock move by the Swiss to end their pegging with the Euro, followed by the ECB announcement of a €60 billion a month Q.E programme, topped off by last weekend’s news at the Greek elections which looks to spell the end of Austerity for them and a potential departure from the Euro. These 3 huge events sent the Euro into a spiral and within 14 days we saw (at its worst) around an 8 cent loss against GBP, whilst against USD it lost around the same. However this week we have seen the Euro start to gain some strength and that momentum seems to have built throughout the week. On Tuesday slightly poorer than expected UK GDP figures allowed it to start to gain against GBP and this has continued. Against USD it has also managed to claw back some gains, perhaps due to some pricing in of an expected US interest rate hike, which although still likely was not announced this week.

Yesterday’s trading saw this momentum build and strangely despite a raft of poor Euro data, including Eurozone economic and Industrial sentiment data and German inflation data all coming in under expectation we have seen the Euro gain. Add to that strong US data showing a decrease in jobless claims (which would normally encourage Euro weakness) the single currency has gained – throughout the day’s trading stealing around a cent against both GBP and USD. It would seem perhaps that following the 3 major events seen earlier this month that the rates we have seen have been largely inflated given that now amidst poor data which would normally see it weaken we are now seeing strength. So we may well be seeing the markets correct from all the recent excitement with rates beginning to drop again.

Today we do have a number of smaller releases from the Eurozone but the main focus will be on Eurozone Inflation in the morning and then later in the afternoon US GDP – both of which have the ability to move rates, result dependant.

However at present there may be some cause for concern as the Euro seems to have in the short term picked itself up and dusted itself from the recent battering it has received, and based on yesterday’s trading, current sentiment could outweigh data.

Any of you with upcoming Euro requirements may like to take advantage of the current rates before they potentially slip back, so speak to your Currency Index broker today for some friendly and professional guidance on how to get the most out of transfer and protect yourself against any further movements.