What Lies Ahead For The Euro
30 June, 2015
In the past 24 hours we have seen a roller coaster ride for the ailing euro with a four cent range on rates with little logical reason.
Overnight on Sunday we peaked at the best rates we have seen since pre-recession trading although as European markets opened yesterday those rates dropped sharply and spent most of yesterday strengthening. This is strange as the EU ecostats that came out all came in under expectation with business, consumer, industrial and services data all missing their mark, while German inflation figures also came in under at 0.3 percent compared to 0.5 percent.
Coupled with that, the news wires were reporting all day that Greece was likely to miss their €1 Billion repayment to the IMF which is due by the end of today and that they could well be looking at an exit from the EU very soon. All this should by all logic mean a weaker currency but the euro didn’t seem to play ball. Overnight the rates for buying euros dropped to their lowest levels in a couple of weeks, which analysts we have spoken to this morning putting it down to profit taking by Asian investors, from the levels they traded at overnight on Sunday.
So far this morning the pound is on the front foot again but with little to go on ecostats wise will it last? Today we see UK GDP and total business investment figures, while in the EU inflation readings are released. This afternoon Canadian GDP comes out at lunchtime which pretty much rounds off the month and the second quarter of 2015 as we only have a few low key US releases to contend with.
The real news is of course all about Greece, with another Eurogroup meeting happening it’s all down to whether a deal can be agreed with Greece to avoid them defaulting and fundamentally opting out of the EU and the single currency. Will this happen and if so, will it be a good or a bad thing? These are the questions we just don’t know the answers too and as such, reading the way the markets might react is impossible. So if you have a currency transaction to make in the coming days, especially one involving the euro, it might be prudent to get it fixed up early today, be it on a spot or forward contract to avoid the inevitable fireworks later. As the UK welcomes a heat wave, the markets will no doubt be feeling the heat today too!
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