By Simon Eastman
Last week we saw the pound fare well against the single currency, moving up towards the top of the recent trading range as growth concerns weighed on the euro.
GDP for the Eurozone on Friday came out lower than expected, with a negative 0.2 percent reading for the quarter, while the year figure was just 0.3 percent compared to the forecast 0.8 percent.
The winner for last week was the US dollar though, which ended the week up a cent and a half against the pound and over a cent up against the single currency, following stronger than forecast Non-Farm Payrolls for May. The figure, which was expected to be just 85,000 new jobs created, came out at 172,000, smashing the predictions. Coupled with stronger average earnings and a lower unemployment rate than the previous month and the greenback took flight.
For those looking to buy that place in the European sun, now could be a good time to look at securing your completion funds while the going is good. We have the European Central Bank meeting on Thursday to announce their interest rate policy and there are some expectations we could see a 25-basis point hike. Those who follow currencies will know that this is the number one driver for a currency; interest rates go up, investor interest increases and the currency gets stronger. Bad news if you are looking to buy that currency.
To take out that risk, speak to one of the team today about forward contracts, which allow you to fix the rate today, whilst only parting with a small portion of the overall cost initially, keeping the majority free to earn you interest until you need to pay for that house in the sun.
Some other releases to take note of are as follows:
Today, we have German factory orders and EU Sentix investor sentiment survey.
Tuesday brings German industrial production and trade balance and a speech by ECB President Legarde at 5.30pm ahead of the 2-day ECB meeting to decide interest rates.
Wednesday is US focussed with all major data coming out after lunch, with US inflation.
Thursday is dominated by the ECB interest rate decision, policy statement, and subsequent press conference, whilst the US releases further inflation readings.
The week rounds off with UK GDP, industrial and manufacturing production, and trade balance, followed by German inflation, UK inflation expectations and finally the Michigan consumer expectations and sentiment indices and the University of Michigan 1 year and 5-year consumer inflation expectations.
Plenty for traders to get their teeth stuck into and to move the markets, so make sure you stay in touch with your currency consultant here to help make your money go further.