Winds of Change Buffet Euro
Morning mid-market rates – The majors
February 21st: Highlights
- French Election concerns continue
- Another Greek solution?
- Merkel bemoans weak Euro
Look Left, Look Right, Look Left again
Two left wing candidates have announced that they will seek to cooperate but there has been little progress in any alliance.
Traders are becoming used to political events driving markets more than economics and this development is set to stay with us for some time to come. With elections in The Netherlands and Germany either side of the French vote, the whole political map of Europe’s major economies could change this year.
While the British Government presumably works quietly to prepare for the triggering of article 50, there must be some domestic interest in the welfare of the anti-EU/anti Euro parties.
What has happened to the Euro? Well it continues to trade in a narrow band where 1.0680 is attracting sellers for now and interest to buy is providing support around the low/mid 1.05’s
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Greece Leaves reform to the experts
Merkel Dreams of the Deutschemark
“If we still had the Deutschemark, it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.” In other words, “we are stuck with having to help those profligate nations used to borrowing their way out of problems but this is the price we pay for control”. It is entirely possible that she only has six months to worry as she is by no means certain to win a fourth term in the election later in the year.
The “Ecofin” meeting of Eurozone finance ministers continues today and while there is no official press comment, there will be plenty of opportunity for the more verbose ministers to have their say.
Brexit has fallen into an “administrative” stage for now with behind the scenes preparations taking place so the opportunity to “bash the U.K” probably won’t to taken up (this time).
Purchasing managers reports on economic activity are released today in the Eurozone and U.S. with both set to confirm expansion in the manufacturing sector. Yesterday’s industrial trends survey of British industry showed surprising strength.
Elsewhere in the world, high commodity prices continue to support the Australian, Canadian and New Zealand dollars. Australia reports trade data next week following a record surplus last month.
The Japanese. Yen and Swiss Franc, seen as safe haven currencies attracting buyers when the market turns risk averse, are forecast to strengthen should the European political situation turn more radical.
Have a great day!
About Alan Hill
Alan has been involved in the FX market for more than 25 years and brings a wealth of experience to his content. His knowledge has been gained while trading through some of the most volatile periods of recent history. His commentary relies on an understanding of past events and how they will affect future market performance.”