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Monthly Wrap: Euro shakes off German recession fears

currency-newsMonthly Wrap: Euro shakes off German recession fears
Key Takeaways:
 
  • ECB easing still expected in September
 
  • Fears of a possible German recession persist
 
  • EUR Monthly highs: £0.92, $1.12, AU$1.67, C$1.49, NZ$1.75
 
  • EUR Monthly lows: £0.89, $1.10, AU$1.58, C$1.45, NZ$1.65
 
Despite no real signs of economic recovery in recent German and Eurozone ecostats, the Euro has avoided significant losses.
 
The euro has shown resilience thanks to a slightly less dovish than expected tone from European Central Bank (ECB) President Mario Draghi at the ECB’s July policy decision and US dollar weakness.
 
The euro has seen especially notable gains against weaker rivals. The Pound, for example, has been throttled by worsening no-deal Brexit fears while the Australian dollar, Canadian dollar and New Zealand dollar have all been weakened by rising trade tensions.
 
But euro losses could be on the horizon. Germany’s June industrial production report showed a shockingly deep contraction with no apparent silver lining, prompting economists to speculate that the Eurozone’s biggest economy could see a technical recession this year.
 
Major German data will be published next week, giving investors a clearer picture of the extent of the problem. Next week’s German inflation and growth rate stats will be of particular interest.
 
If German growth falls short, the euro’s chances of holding recent gains are limited, even if US-China trade war fears persist and diminish the appeal of USD.
 
As September arrives and the Eurozone’s Q3 growth estimates are published, Euro investors will start to focus on ECB monetary policy speculation ahead of the bank’s September policy decision.
 
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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