As regular readers would have spotted this week there are some key events which could have a founding impact on the exchange rates, especially anything to do with the single currency.
As we enter a new month we have a host of economic data due plus important central bank meetings both side of the challenge and this is what most traders eyes will be one. The Eurozone has had growing concerns about inflation which has been stuck at 0.7% for a prolonged period. The European Central bank has already commented that they plan to bring in multiple new polices to change this. Fundamentally they need to lower borrowing cost for the banks and make sure that these banks start lending the money out to the public, which in turn needs to start spending to impact inflation. This could be anything from a new bond, to a form of Quantitative easing or to even lowering their interest rates. All of which could happily have a large impact of the value of the euro and therefore its cost.
Tomorrow morning we have European inflation data along with unemployment information which will probably become the foundation of the forecasts for the bank meetings on Thursday. My view is the levels reached this week could easily hit new highs. Potentially the highest level in 18 months or even TWO YEARS!!!! The question is however; when will the peak be reached?
This news and expectation is so wildly know about the market should price in a large amount of it before hand. Meaning that on the actual release if they meet expectations rates will go up a little but if they miss it GBPEUR levels will go down a large amount. Personally I would trade beforehand on the expectation rather than rolling the dice on the release itself. The highest levels beforehand could either be on Thursday morning before the noon release or tomorrow morning on the European news. This we will have to be reactive for and is exactly what we are doing here for our clients as of this moment. If you would like more assistance over and above these blogs feel free to get in contact. You can contact myself – STEVE EAKINS – via my email address which is [email protected]
Other topics to be aware of is that we also have the Bank of England meeting on Thursday too. This is not expected to have any impact on markets as no new information is expected. There is however a very slim chance that they could introduce a new policy to tackle or pop the housing market bubble. This would be negative if seen but it is unlikely.
For more information, live quotations, rate alerts or spike notifications call us today asking for Steve Eakins or email the author directly via [email protected]