The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
The euro started the week on the advance, although its gains were curbed by mixed data and concerns regarding the Greek bailout. French GDP clocked in higher-than-forecast, but Eurozone confidence surveys revealed worse-than-expected sentiment in the currency bloc and Germany’s inflation data showed a decline on the month. Additionally, it was rumoured that the Greek government may even waive its next tranche of bailout funding - worth €7.5 billion - if its creditors could not agree on debt relief.
Employment data helped push EUR up higher on Wednesday after the German unemployment rate for May dropped to 5.7% and the Eurozone joblessness rate fell to 9.3% unexpectedly; its lowest level in more than eight years. Even though German retail sales data for April showed a surprise contraction, the euro was on buoyant form.
With the key US non-farm payrolls report quickly approaching, the Euro was on mixed form towards the weekend, despite Thursday’s strong data. Eurozone manufacturing PMIs revealed a surge in new hiring in the sector. Italy’s first-quarter GDP data also impressed, recording 0.4% growth quarter-on-quarter against predictions of 0.2%, and a 1.2% expansion on the year instead of 0.8%.
The euro ended the week on mixed form, responding to the strength and weakness in its peers rather than driving movement itself. US data surprised the markets and this left the euro rather unappealing.
There is a steady supply of low and medium-impact data due for release this week, but all this is likely to be somewhat overshadowed by the approach of Thursday’s latest European Central Bank (ECB) interest rate decision. While a change to interest rates is unlikely, there could be some discussion on whether or not to reduce the scale of the massive quantitative easing programme. It is likely ECB President Mario Draghi will send the euro lower during his post-meeting press conference, as he is traditionally cautious on the outlook for interest rates.
We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.
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)