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Weekly Roundup: Euro slumps following ECB rate hike

currency-newsWeekly Roundup: Euro slumps following ECB rate hike
The euro got off to a slow start last week, with the single currency being undermined by an unexpected slump in German factory orders as well as ongoing concerns over the war in Ukraine and its impact on the Eurozone economy.

The single currency mounted a recovery on Wednesday as EUR investors were pleasantly surprised by the Eurozone’s latest GDP estimate as growth in the first quarter was revised up from 0.3% to 0.6%.

However, the euro was then rocked by the European Central Bank’s (ECB) latest interest rate decision.

This initially saw the euro spike as the ECB outlined its plans for a 25 basis point hike in July and hinted that it could deliver a larger hike in September.

However EUR exchange rates quickly corrected amidst concerns over fragmentation in the Eurozone in addition to the bank’s cutting of its growth forecast for 2022.

These losses were then extended at the end of the week amidst a strong pickup in the US dollar.

Looking ahead, Germany’s latest ZEW economic sentiment index could dent the euro at the start of this week, if investors morale remained broadly downbeat this month.

Also of note to EUR investors will be the Eurozone’s latest industrial production release. Will another contraction in the bloc’s factory output push the euro lower on Wednesday?
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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