EUR weakness continues - quiet day with most of Europe on a public holiday

Claire Hogarth10/Jun/2014Currency Updates

GBP

A quieter day in the market yesterday with most of Europe closed for public holidays.

London closed with sterling scalping gains against the euro and dollar.

The UK jobs market continues to look solid with the Manpower quarterly company hiring report showing firms are looking to recruit at the highest levels seen since before the recession.

Manufacturing and Industrial production figures are set for release this morning. The market view remains bullish and a good number could see sterling pivot to the upside. Economists are predicting growth for the 5th month on the bounce with 0.3% called; this would mean manufacturing is up 4% from this time last year.

EUR

Volumes slim with most of Europe closed for Whit Monday. The euro slipped downwards across the board as the market continues to meditate over last week’s ECB action and the prospect of further ECB alteration of monetary policy.

Only data of note was Portugal GDP which came in at a respectable 1.3%, opposed to market calls of 1.7% The Eurozone Sentiex measure of investor confidence is looking pretty miserable coming in at a quarterly low of 8.5 compared to the 13.2 called.

London closed with the euro dipping against sterling and the dollar. Last week saw the euro hit hard, slipping further against sterling and dollar as the ramifications of the ECB action led to a heavy euro sell off. The short-to-medium term market outlook remains bearish with plenty of shorting on the dips. The brief euro push back after last week’s losses was reversed yesterday with further euro weakness.

The euro retreat leaves EUR/USD hovering close to a 4 month low. The euro could face further downward pressure in the near term, hampered by a widening in IR differentials between the U.S and the Eurozone.

Greek Industrial production and CPI will be closely watched today as the market continues to keep a close eye on the recovery.

USD

The dollar held steady against a basket of its most traded currencies yesterday and remained supported over the Asian session. It slipped a little against sterling but continues clinging to wider gains across the board stemming from last week’s US jobs report and higher US bond yields. US stocks continue to fly with the NY close seeing fresh highs for the Dow and S&P.

The dollar index is at 80.607 keeping it above a 2 week dip touched on Friday morning prior to NFP. The greenback continues to hold ground against the euro and is trading at a 4 month high. According to Reuters, the yield spread between 2 year US Treasury yields and 2 year German government bonds has widened to the largest gap since 2007, currently around 36bp.

Data of note today includes the Redbook index; we also have US bond auctions.

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Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.