Euro Woes Continue
The Euro continued to be under pressure yesterday as markets worry about the sovereign risk and the state of some of the Eurozone banks. Comments from the ECB’s Stark did not help matters as he mentioned that he thought German banks need more capital meaning it is at it’s lowest level against the Japanese Yen for 9 years, not ideal for Europeans buying their tech from Japan but German manufacturers could fill some of that gap although that does not seem to be happening.
This brings me onto the woefully poor industrial production figures out yesterday for Germany showed a month on month rise of just 0.1%, markets were expecting a modest 1.0% rise but after Wednesdays abysmal German factory order data expectations must have been on the downside on that. All of this does not bode well for the Euro, the only saving grace that the Euro really has is the fact that many other currencies are also having a bad time and although the euro is very weak at the moment, the pound and the USD are not exactly flying so it is not struggling as much with its main trading partners.
Sterling is boding slightly better following yesterdays industrial and manufacturing production data which came in broadly in line with expectations and giving the pound a small boost. Today we have the Bank of England rate announcement which may offer some indication of their thoughts on policy going forward but if the recent rate announcements are anything to go by then we will get very little for the announcement and have to wait 2 weeks for the MPC minutes to see what they were talking about.
This afternoon also sees the jobless claims data released to the US and after last Fridays non-farm payroll data expectations are for a slight reduction in the people looking for work, if this comes in better than expected then it may help fuel risk appetite and give a boost to GBP and EUR although the recent problems of the Euro will not be forgotten. Going into the weekend we only have the UK producer price index and US inventories tomorrow so short of a surprise we may see a weak close to the Euro’s week.
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