The pound trended broadly lower through June, the currency being primarily undermined by concerns over the UK’s economic trajectory.
Monday started the euro off on poor form after German industrial production declined by a worse-than-forecast -0.6% and Portuguese GDP slowed sharply in the second-quarter. Comments from Andreas Dombret, Director of Bundesbank, raised the likelihood that the European Central Bank (ECB) would leave quantitative easing at its current level in the near-term, further dampening appetite for the euro.
GDP figures for Germany, released on Tuesday, showed that the Eurozone’s powerhouse economy remains on solid form, but the euro was unimpressed that growth eased slightly to 0.6% on the quarter.
Italian and Eurozone GDP followed on Wednesday, but EUR continued to weaken. It was rumoured that ECB President Mario Draghi would not be discussing monetary policy during his speech at the influential US Jackson Hole Federal Reserve symposium, leaving markets in the dark regarding his plans for quantitative easing.
Further policy gloom emerged on Thursday when the ECB released the accounts of its July meeting. The minutes showed that policymakers were concerned by the strength of the euro, fearing that it could impact trade. Markets were understandably quick to sell EUR.
The euro remained on poor form at the end of the week, even as German producer price growth unexpectedly edged higher on the month, indicating that consumers may see rising inflation in the near-term.
There are some big developments on the Eurozone data calendar this week, with markets being treated to two speeches from Draghi.
The influential ZEW German and Eurozone sentiment surveys for August will be released tomorrow, followed by a speech from ECB official Vítor Constâncio.
Tuesday sees Draghi speak in Lindau, Germany, as well as the publication of German and Eurozone manufacturing, services and composite PMIs for August.
Draghi’s Jackson Hole speech is scheduled for 19.00 GMT on Friday.
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)