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Euro rebounds after ECB unveils limited stimulus

business-articlesEuro rebounds after ECB unveils limited stimulus
  • ECB’s monetary stimulus fails to weigh on euro for long
  • US dollar falters after surprise consumer price index dip
  • Pound on the back foot as political uncertainty persists
 
 
Euro set for fresh decline if Eurozone trade surplus narrows
 
The European Central Bank’s (ECB) decision to restart its stimulus programme drove the euro sharply lower yesterday.
 
However, the single currency soon bounced back from its initial losses as markets reassessed the extent of the ECB’s actions, suggesting that the new stimulus may fall short.
 
EUR exchange rates could return to a downtrend this morning if the latest Eurozone trade data disappoints.
 
Any narrowing of the trade surplus may fuel concerns over the resilience of the Eurozone economy and drag on the single currency.
 
 
Slowing retail sales to add to US dollar weakness
 
As the US consumer price index saw a surprise weakening on the year this left the US dollar on a downtrend.
 
With domestic inflationary signals proving weaker than anticipated the Federal Reserve looks set to remain under pressure to cut interest rates more dramatically.
 
If this afternoon’s advance retail sales data points towards a decline in consumer spending on the month USD exchange rates could shed further ground.
 
 
Political uncertainty set to keep pound under pressure
 
Demand for the pound is likely to remain generally muted today given the lack of fresh UK data releases.
 
Without a boost from positive domestic data the pervasive sense of political anxiety looks set to keep GBP exchange rates under pressure.
 
Even though Boris Johnson reported confidence in his ability to reach a Brexit deal at the October EU summit investors maintain a wary view.
 
Until there is a greater sense of clarity over the UK’s future relationship with the EU the potential for pound gains is limited.
 
 
Upcoming Data:
 
Friday, 13th September 2019
10:00 EUR Eurozone Trade Balance
13:30 USD Advance Retail Sales
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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