Tag Archives: Euro

Currency Matters: EURO

Currency Matters: EURO

The Euro has fallen across the board over the weekend as Italians voted “No” in a referendum rejecting Prime Minister Renzi’s constitutional reforms, prompting his resignation. The anti EU and populist 5 Star Movement campaigned hard for a “No” vote and the outcome will be seen as  an indication of growing support of Italy’s populist anti EU Movement and is seen as confirmation of growing anti-establishment/anti EU sentiment across Europe.  However, it is worth noting that in the short term a grand coalition will likely be formed keeping 5 Star away from power and most Italians do continue to support Euro membership. Moreover, in Austria the electorate voted for Pro-European Alexander Van der Bellen against the anti EU and far right candidate Norbert Hofer.

The markets reacted clearly, pushing the Euro sharply lower through a 12 month low to 1.0507 against the Dollar. Against the Pound the Euro fell to its lowest level since the BREXIT Referendum result to 0.8305 (GBP/EUR 1.2041).

In the UK, today marks the start of the key landmark legal hearing by the Supreme Court on whether Parliament’s consent is required before the Government can trigger Article 50 – the formal process of leaving the EU. This follows the election of pro-EU Liberal Democrat Sarah Olney in the Richmond Park by-election following Zac Goldsmith’s, a prominent “Leave” supporter, decision to quit the Conservative party and run again as an independent following the Conservative Government’s decision to expand Heathrow.

The European Central Bank (ECB) meeting on Thursday will be seen as the key event this week. Policymakers are set to decide on the future of the EUR 80b a month asset purchase program, which is scheduled to end in March. The result of the Italian referendum will heighten the need for the ECB to extend the program. Meanwhile, depending on market reactions to the referendum, the ECB could also tilt the program towards Italian government bonds to stabilize any volatility. Markets are currently expecting a six month extension to the program. The Euro would be vulnerable to deeper falls if the ECB announce something greater than that.

The Euro could continue to fall and the next level of support against the US Dollar is 1.0461 and 0.8116 (GBP/EUR 1.23) against the Pound.

Please do not hesitate to contact the dealing team on telephone +44 (0) 1695 581 669 to discuss how upcoming events could have a bearing on the cost of your foreign currency payments and how Currency Matters can save you time and money.

GBP/EUR 3 Month High

The Pound has appreciated to a 3 month high of 1.1947 against the Euro and appreciated against the US Dollar to 1.2695 following hints from UK BREXIT Minister that the UK wanted to get the best possible access for goods and services suggesting paying for access to the Single Market may be an option.

This Sunday Italy holds its referendum on constitutional reform with Prime Minister Renzi pledging to resign if voters don’t vote for his proposals. Whilst this is not a vote on EU membership there will be significant implications if Renzi resigns as a new caretaker government would likely be appointed and new elections could follow as early as next year. This could open the door to the election of the Five Star Movement a populist, anti-establishment party that has said in the past it wants to call a referendum on membership of the Euro.

Please do not hesitate to contact the dealing team on telephone +44 (0) 1695 581 669 to discuss how upcoming events could have a bearing on the cost of your foreign currency payments and how Currency Matters can save you time and money.

POUND CONTINUES TO FALL ON FEAR OF BREXIT

The Pound (GBP) has fallen again today breaking below 1.40 against the US Dollar (USD) for the first time since March 2009 with the current low at 1.3880. Against the Euro the Pound has also fallen hitting a low so far of 1.2646(0.7908) on the interbank market.

29 out of 34 economists surveyed by Bloomberg anticipate the GBP/USD rate to fall to 1.35 (low 2009) or below in the event of a BREXIT. The last time GBP/USD traded below 1.35 was in 1985.
Please do not hesitate to contact the dealing team on telephone 01695 581 669 or by email info@currencymatters.co.uk for further information or for a live quote.

EURO

Yesterday the Euro surged across the board after the European Central Bank (ECB) disappointed market expectations of significant monetary easing, keeping the main interest rate at 0.05% and only tweaking the deposit rate from -0.20% to -0.30%. The ECB also extended their €60 billion a year Quantitative Easing asset purchase program for an additional six months, to March 2017. Given the struggling Eurozone economy, the markets had expected a substantial increase to the asset purchase program or significant reductions to other ECB interest rates. The lack of any substantial moves by the ECB surprised the markets and the Euro responded with sharp gains against the US Dollar, Pound and other major currencies. EURUSD appreciated from 1.0506 to 1.0981; EURGBP appreciated from 0.7023 to 0.7251 (GBPEUR 1.4239 to 1.3791). The Pound followed the Euro higher against the US Dollar although not to the same extent with GBPUSD moving from a low of 1.4902 to 1.5158.

POUND FALLS, US DOLLAR SOARS.

Yesterday 05/11 the Pound tumbled in value following the Bank of England’s latest report which downgraded both the UK growth and inflation forecast and subsequently pushed out market expectations of a Bank of England interest rate rise. The Pound fell over 1% against all major currencies with GBP/EUR falling from 1.4199 to 1.3966 and GBP/USD falling from 1.5401 to 1.5203.

This afternoon 06/11 the US Dollar has appreciated strongly, more than 1%, following overwhelmingly strong US employment data. The US Dollar appreciated strongly against the Euro forcing EUR/USD down from an earlier high of 1.0892 to a low of 1.0707. The US Dollar also appreciated against the Pound with GBP/USD falling from 1.5219 to 1.5030. The US Dollar also appreciated against the Swiss Franc with USD/CHF appreciating from 0.9946, through parity to 1.0065. With the US Dollar appreciating more against the Euro than the Pound, GBP/EUR recovered from 1.3896 to 1.4065.

There is lots of global economic data due for release next week and we also have speeches from Bank of England Governor Mark Carney and ECB President Mario Draghi on Wednesday 11/11 which both have the potential to move the market.

Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for further information or for a live

 

 

Currency Matters

The Euro and US Dollar generally both traded lower following quieter markets during yesterday’s US bank holiday and as markets begin to shrug of concerns of China’s slowing economy increasing risk appetite. As a result GBP/USD appreciated from a low of 1.5162 yesterday to a high so far today of 1.5404 and currently trades mid-morning at 1.5380. GBP/EUR also appreciated to a high of 1.3786 after trading as low as 1.3592 yesterday. EUR/USD continues to trade between 1.11 and 1.12 and currently trades at 1.1160.

The currency markets are extremely volatile and Currency Matters can offer a number of products which can help eliminate currency risk and get you the best exchange rate available in the market.

CURRENCY MATTERS PRODUCTS:

Very simply, Currency Matters can send or receive any deliverable currency to or from any valid bank account anywhere in the world.

Spot foreign exchange:

This is the traditional foreign exchange contract where you buy a currency for settlement in two working days. Upon settlement we will make a payment according to your instructions. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Same day / next day foreign exchange:

We can offer same day and next day settlement for some of the major currencies, depending on amount and availability. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Forward Contract (Fixed Date):

A Forward Contract is one which is agreed for settlement at some fixed point in the future, after two working days. The Forward price is based on the current Spot price and adjusted for the interest rate differential between the currencies being bought and sold. This Forward rate may be more or less than the current Spot price. A small deposit is required to secure a Forward Contract. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Forward Contract (Variable Date):

Similar to the description of the Forward Contract above, but settlement is agreed to occur between two dates, at the client’s discretion, rather than on a fixed date. This is particularly useful when you don’t know precisely when you would need to settle with your counterparty. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Market Orders:

Currency Matters offer the facility to place market orders – either on a “limit” basis or on a “stop” basis. For example, you can place a limit order to buy your currency at a predetermined price, above the current rate. Alternatively you can place a stop order to buy your currency at a predetermined rate, below the current rate. We can also work orders on a “one cancels other” basis, so if you have both a limit and a stop order in place, and one is executed, the remaining order is automatically cancelled.

Please do not hesitate to contact a member of the dealing team on telephone +44 (0) 1695 581 669 or email info@currencymatters.co.uk for further information.

 

 

EUR Rebound

The Euro rebounded strongly yesterday 02nd June amid optimism that Greece is moving closer to reaching an agreement with its international creditors and reports that the European Central Bank increased the level of emergency cash available to Greek banks by €500m. Moreover, inflation data released from the Eurozone suggested that deflation risks have subsided as the Consumer Price Index (Core YoY) beat market expectations at 0.90%.

Today 03rd June, European Commission President Jean-Claude Junker is set to meet with Greek Prime Minister Alexis Tsipras and the European Central Bank will also meet to make its interest rate decision. It is expected the European Central Bank will hold its key interest rate at the record low of 0.50% whilst possibly accelerate their EUR60bn per month asset purchase program. The outcomes of both meetings will be watched closely by market participants.

Elsewhere we have a raft of data due out of the US this afternoon including mortgage approvals, employment data, trade balance and Purchasing Managers Index data. This evening the Federal Reserve will also release its Beige Book economic report.

As a result the Euro has spiked higher against the US Dollar and the Pound with EUR/USD hitting a high of 1.1193 and EUR/GBP pushing through 0.73p (GBP/EUR below 1.37). Elsewhere, GBP/USD has traded between 1.5375 and 1.5215.

ECB & BoE Reaction: EUR Lower

The European Central Bank (ECB) will start its new government bond-buying programme on 9th March hoping to boost growth and lift inflation in the ailing Eurozone. The ECB plans to spend €60bn a month on buying sovereign bonds and some private sector assets with the purchases likely to last until at least September 2016.

In the UK the Bank of England (BoE) kept rates unchanged, meaning they have now been at their record low of 0.50% for six years. Whist none of the leading economists polled by Reuters expect the Bank of England Monetary Policy Committee to raise rates before the UK general election in May, there are some expectations that the BoE may increase rates sooner than currently forecast by the markets meaning that the ECB and BoE could have diverging monetary policies, thus supporting the Pound further against the Euro.

The Euro (EUR) fell to its lowest level against the US Dollar (USD) in over 11 years hitting a low so far of 1.1008 on the interbank market. The Euro also fell against the Pound (GBP) with EUR/GBP hitting a low of 0.7224 (GBP/EUR high 1.3842).

EUROPEAN CENTRAL BANK LAUNCHES €1.1 TRILLION STIMULUS

The Euro has weakened across the board as European Central Bank (ECB) President Mario Draghi launched an expanded asset purchase program, committing to €60bn of private and public debt asset purchases every month from March 2015 to September 2016. The policy was larger than market expectations which predicted asset purchase totalling €50bn per month.

Following the announcement the Euro plunged to its lowest level in over 11 years against the US Dollar with EUR/USD trading as low as 1.1402. The Euro also fell against the Pound with EUR/GBP hitting a low of 0.7566 (GBP/EUR 1.3217). The Euro continues to trade around parity against the Swiss Franc trading today between 0.9846-1.0033.

THE SWISS NATIONAL BANK (SNB) DISCONTINUES MINIMUM EXCHANGE RATE

The Swiss National Bank (SNB) shocked financial markets on Thursday by scrapping a 3 year old cap on the Franc (CHF), sending the Franc soaring against the Euro (EUR). At one stage the Franc had appreciated nearly 30% in value against the Euro, with EUR/CHF falling from 1.2011 to 0.8597 before recovering nearly 15% back to 1.01. The Franc also dropped dramatically against the US Dollar (USD) with USD/CHF falling from 1.0220 to 0.7407 before recovering to 0.87.

As the SNB removed the upper limit on EUR/CHF, the SNB sought to discourage new flows into the Franc by cutting its sight deposit rate from -0.25% to -0.75% making it more expensive for banks and investors to hold the Franc.

The dramatic change in policy from the SNB comes a week before the European Central Bank (ECB) is expected to unveil a bond buying programme to counter deflationary pressures, feeding speculation that the ECB Quantitative Easing (QE) scheme could be so big that the SNB would have struggled to defend the EUR/CHF cap. The Euro was forced lower across the board with EUR/USD falling to 1.1567 before recovering back to 1.16 and EUR/GBP falling to 0.7623 (GBP/EUR 1.3118).

A full copy of the SNB press release can be found at: http://www.snb.ch/en/mmr/reference/pre_20150115/source/pre_20150115.en.pdf