Euro struggling at every turn

11 March, 2015

Tom Arnold

Recent currency market movement has been dominated by the Euro, with the single currency struggling at every turn and decreasing in value day after day after day. Firstly the Swiss removed their cap against the Euro, secondly the ECB announced a massive round of QE and most recently the Euro has been suffering as a result of the Greek mess. As we stand at the moment the Euro is trading at 8 year lows against the Pound and 12 year lows against the Dollar.

The Greek situation is ongoing with predictions that Greece is going to run out of money in the next two weeks, coupled with ongoing negotiations between the Greek government and the Eurogroup, overshadowing any chance the Euro has of reversing the current trends.

In addition to the burden of its own problems the Euro is also having to deal with the weight of a consistently strong US Dollar. In recent days we have seen positive data from the US, most notably good jobs numbers at the end of last week, and also a more positive stance from the Federal Reserve. When one of these two is performing well, the other always struggles as a result of investors hopping between the two to get the most secure position. This Dollar strength has also impacted Sterling, with recent gains made by the Pound swiftly reversed and the lows of late January firmly back in place.

On the Sterling side, things are much less clear cut. On the face of it the Pound is doing well, supported by relatively positive data and a fairly positive Bank of England. However a general election within the next two months is almost certainly going to provide enough political and economic uncertainty to seriously curtail Sterling’s position, which could mean even greater drops against the Dollar and a swift end to the amazing highs against the Euro.

There is quite a bit happening on the markets today, with UK industrial and manufacturing production numbers due this morning, US mortgage approvals and GDP estimate this afternoon, New Zealand interest rate decision this evening, and all of this on top of ECB President Draghi already having spoken this morning, specifically about the QE programme, which has weakened the Euro further.

Make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and how it could affect your upcoming currency purchase, and don’t forget you can take advantage of the highs we are currently experiencing, even if you don’t need your currency straight away, using a forward contract.