Home > Resource Hub > Daily Market News > Let’s Talk About The Euro

Let’s Talk About The Euro

Let’s Talk About The Euro

Good morning. Things have been heating up slowly this week and will certainly get a lot hotter today as it’s “Rates Day” for both the UK and the Eurozone. Although neither are expected to change their interest rates, there is huge interest in the statement coming out of the BoE and Mario Draghi’s press conference following on from the rate decision.

The main focus is on the Euro, which is sinking on a daily basis at the moment. Not since the Black Eyed Peas, Dido and Gareth Gates battled for top spot in the charts in September 2003 has the Euro been at such a low level against the US Dollar and we don’t expect it to stop here. German factory orders have come in worse than expected and this has simply highlighted the increasing divergence between the Eurozone and the US. As the Euro services business fall, the US equivalent has gone from strength to strength. US consumer spending is rising and manufacturing is gaining. The American economic future is looking rosy. The European one, not quite so.

Whilst we are getting good results out of the UK, the Pound is currently strengthening against the Euro but struggling against the US Dollar. The reasons for this is most likely due to the uncertainty of the impending General Election and also it’s proximity to the Euro.

In Mario Draghi’s press conference we should find out the finer details of the Quantitative Easing plan which was announced in late January. We found out that €60bn per month will be pumped into the market starting from this month and lasting until September 2016 at the very earliest, but we don’t know exactly when it will start and under what rules it will operate.

It can be argued that the whole QE episode has highlighted the difficulties the Eurozone faces over and above any other central bank. Due to the nature of the union, things appear to be always be “too little, too late” and whilst most other big economies have already started to remove stimulus measures, the Eurozone are just getting started on this long, hard road. With its main objective to keep inflation under control and appease the different governments, the advent of QE will also mean that there will be no interest rate movements from the ECB in the considerable future.

Times to look out for today are 12.00 for the Bank of England rate decision and policy statement, 12.45 for the ECB rate decision and 13.30 is when Mario Draghi begins his press conference.

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.