Take a trip to the Eurozone

3 July, 2013

Tom Arnold

Today is likely to be a fairly quiet day on the markets, with most analyst’s eyes firmly fixed on key data releases tomorrow and Friday. Tomorrow we have European GDP and then both UK and European central bank monthly policy statements. Friday gives us a more US themed day with various jobs data culminating in the critical Non-Farm Payrolls. European GDP has been a cause of great concern for some time now, with the zone firmly in the grip of recession. Last month was expected to be the first where growth showed signs of recovery, and instead it got significantly worse. If we see another negative figure this morning, then don’t be surprised to see the Euro weaken off, and likewise signs of the hoped for recovery could give the Euro a boost. The central bank’s announcements are less likely to bring any big change, and as usual people will be more focussed on what is said rather than what is done. The ECB will give their press conference straight afterwards, and could compound any news from the earlier GDP announcement. Whereas the BoE don’t release any further info for 2 weeks, so we will have to wait and see what new governor Mark Carney has been saying and doing during his first few days in the job. US Non-Farms is critical and will give us a clear indication of the US economy’s position. The Dollar has been on a rally recently, pushing both the Pound and the Euro down, and a good figure from the US is likely to see this continue. As an aside, the Egyptian protest situation is putting immense pressure on oil prices, and coupled with a lower than anticipated output in the US, the Dollar could come under significant pressure if prices start to soar. The US is one of the world’s largest net importers of oil and traditionally higher oil prices lead to a weakening Dollar. We could also see a strong Canadian Dollar, as Mark Carney’s former patch is one of the largest net exporters of Black Gold and so generally does well from higher Oil prices. If you have a currency purchase to make in the coming days, it is very important to make sure you stay in close touch with your CI account manager, to be kept well informed on what is happening and how it could affect your need totsend money abroad.