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A bit of positivity for the Euro

A bit of positivity for the Euro

Yet again the Euro weakened yesterday, reaching 1.4250 versus GBP, however it spent the afternoon fighting back and even broke back below 1.4100 early this morning. This volatility is a direct measure of the level of uncertainty around the currency. As far as the Euro is concerned the market seems to think this is a step forward before taking another two steps back.

Yesterday GBP/USD fell below 1.5000 and EUR/USD below 1.0500 – this was mainly a continuation of the recent trend after US payrolls data earlier this week and the continued flows from EUR into USD.

Today we have US retail sales released at 12:30 today (GMT) – a positive figure could see yet another drive from the US Dollar, albeit slightly delayed until the US opens at 2pm UK time.

Also at lunch time today we will have Mark Carney speaking at the Advanced Manufacturing Research Centre. This will be watched less closely than yesterday’s speech, but any public outing for Mr Carney is an opportunity for the market to pick up hints on future rate policy. In yesterday’s speech to the House of Lords Economic Affairs Committee Mr Carney said, “The thing that would be extremely foolish would be to try to lean against this oil price fall today [and] try to provide extra stimulus to try to get inflation up at this point in time.The impact of that extra stimulus […] would happen well after the oil price fall had moved through the economy and we would just add unnecessary volatility to inflation. That would be foolish.”  This did give GBP a temporary extra push against EUR, albeit short lived.

The NZD outperformed among the majors following the Reserve Bank of New Zealand rate decision overnight where it kept rates on hold – clearly much of the market thought there was a case for a rate cut. AUD strengthened moderately following a stronger than expected February employment report.

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