Euro continues to fall as the ECB’s QE programme begins

Enrique Díaz-Álvarez10/Mar/2015Currency Updates


It was a very quiet start to the week for the UK currency on Monday. A lack of any significant data releases both domestically and abroad caused Sterling to trade within a narrow band against its major peers to finish London trading 0.4% higher against the single currency and 0.1% up on the US Dollar.

UK businesses saw their overall costs fall last month for the first time in six years according to accounting firm BDO. Low inflation, driven down by declining oil prices, were cited as causing the lowest ever proportion of businesses (44%) to report year on year increases in cost. The same report also showed that companies were increasing the number of people hired, with a net 4.2% of small firms taking on new staff in the last quarter.

The week ahead for the UK will be mostly subdued, as far as data releases are concerned. At just after 2:30pm today, the Governor of the Bank of England Mark Carney will be making a speech at the House of Lords Economic Affairs Committee.


Another poor day’s trading for the Euro saw the single currency slip by 0.1% versus the Dollar after the ECB officially confirmed the start of its QE programme via its twitter account on Monday morning. While the currency began the day slightly higher than the eleven-and-a-half year low touched at the end of last week, poor trade data from Germany led to a depreciating Euro throughout most of the day.

Germany’s giant trade surplus dwindled at the beginning of the year after exports fell more than forecast. Exports in the Eurozone’s largest economy fell by 2.1% in January while imports were down by only 0.3%. The overall balance of trade dipped to 19.7 billion Euros, although still remains enviably large compared to the rest of the Eurozone. Elsewhere, investor confidence, as measure by Sentix, soared to a seven year high of 18.6. Greece and Eurozone ministers met for another Eurogroup meeting on Monday in order to discuss the new reform plan sent by Athens last week. Talks were said to have been “positive” ahead of further discussions scheduled for Wednesday.

No major data releases out in the Eurozone today. Market focus will instead switch to ECB President Mario Draghi who is due to speak in Frankfurt on Wednesday, followed by German inflation data on Thursday morning.


The US Dollar continued its rally against its major counterparts following on from last Friday’s impressive nonfarm payroll and unemployment data. A 0.3% increase in the US Dollar index took the currency to within touching distance of yet another fresh multiyear year high against its counterparts.

Much like in the UK and Europe, Monday was a mostly quiet day for the US economy with only the one data release of any note. The Federal Reserve’ labour market conditions index, which represents a weighted combination of a number of labour market indicators, was down marginally on the previous recording in February. The index declined to its lowest level since October from 4.9 to 4.0, although its effect on the Dollar was negligible.

Today looks set to be another mostly uneventful day in the US economy. Job openings and wholesale inventory data, both at 2pm UK time, will likely cause no more than moderate levels of volatility.

Rest of the world

Brazil’s Real tumbled early on Monday trading to record its sixth straight session of losses after investors feared the President would not impose austerity measures due to a lack of political strength.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.