As the G20 meeting continues to it most likely totally uneventful end, markets are starting to turn against the Euro which up until the last few days has been a pillar of strength in the currency world. Much of the recent strength that the Euro has seen recently seemed to be based on Germany’s strength, the fact that there are some countries in the eurozone in a pretty dire state did not seem to faze investors. This seems to have come to an end quite abruptly as fears over Ireland’s deficit problems surface causing the single currency to fall to 1.3570 and allowed Sterling to get above the 1.18 mark in overnight trading. An announcement this morning from the five EU countries attending the G20 has eased fears a little but now the Eurozone problems are at the front of people’s thoughts it will not be forgotten quickly.
Barack Obama has had to defend the Fed’s recent actions at the G20 as the bickering continues about current account deficits and surpluses. President Obama is proposing to put targets or “indicative guidelines” in place but there has been resistance from several countries including China and Germany.
This morning we have had German GDP figures coming in very slightly below expectations and we have the GDP for the Eurozone at 10am expected to come in at 1.9% but if Germany, the strongest county economically in Europe, can’t live up to expectations there is a chance that this may fall short leaving the Euro even weaker. It makes a change from the usual way I round off this note but going into the weekend it looks like Euro weakness could be the main market driver rather than the benefactor of Sterling or USD weakness.