Euro continues its plunge to fresh multi-year lows

Enrique Díaz-Álvarez11/Mar/2015Currency Updates


The UK currency traded mostly within a narrow band against the Greenback once again on Tuesday to finish London trading 0.1% higher.

Retail sales in the UK edged up marginally in February according to the British Retail Consortium, climbing by 0.2% on a yearly basis. A fall in the headline inflation figure to record lows of late has boosted disposable income and increased consumption so far in 2015. A data light day in the UK meant all attention was on Governor of the Bank of England Mark Carney as he appeared in front of the House of Lords Economic Affairs committee. Carney reiterated risks of low inflation, a global slowdown, and the need for gradual interest rate hikes. Importantly, he warned strongly against the need to use extra monetary stimulus in a bid to reverse inflation in the UK economy. However, a lack of any new information translated into little Sterling movement during the afternoon.

A string of announcements from National Statistics this morning including industrial and manufacturing production for January, likely to cause moderate Sterling volatility. This will be followed by NIESR’s GDP estimate at 3pm.


More Euro weakness on Tuesday saw the single currency depreciate by a further 0.8% on the US Dollar, edging closer to parity for the first time since 2002. The Euro also plunged by 0.9% on the Pound.

Finance ministers from across the EU met for an Ecofin meeting in Brussels yesterday. While Greece was for once not top of the agenda, Eurogroup president Jeroen Dijsselbloem warned of a lack of faith in the Greek government, while German finance minister Wolfgang Schaeuble criticised Greece for wasting time on the country’s reform process. In terms of data, industrial production fell in Italy in the first month of the year. The figure, measured by the National Institute of Statistics, slipped by 0.7% MoM in Europe’s third largest country after two straight months of increases. The annualised figure fell back into negative for the seventh time in eight months at -2.2%. Elsewhere in Europe, retail sales in Spain rose for the fifth straight month in January, up by 4.1% year-on-year, while industrial output growth in France slowed to 0.4%.

Wednesday looks set for limited data out in the Eurozone. President of the ECB Mario Draghi will, however, be making a speech at the Centre for Financial Studies conference in Frankfurt at 8am London time.


The Greenback continued to soar against its major peers, climbing by 0.4% and taking the US Dollar index to yet another eleven-and-a-half year high.

Wholesale inventories unexpectedly rose in January. A decline in sales at wholesalers by 3.1% caused inventories to climb by 0.3%, pushing the number of months it would take to clear warehouses to its highest level in more than five-and-a-half years. This, coupled with weak construction spending and export growth, may cause downward revisions in growth estimates in the US for Q1 this year. Optimism among small businesses also climbed less than expected in February. The index, measured by the National Federation of Independent Business, rose marginally to 98.0, although is still well down on the multi-year high recorded in December. In other releases, job openings, measured by the US Bureau of Labor Statistics, increased by 2.5% to a fourteen year high at just shy of 5 million. This came after the number of people who quit their jobs rose by 3% to 2.8 million, the most in more than six years.

A mostly quiet day expected across the pond. Mortgage applications out in the US at 11am GMT today will be followed by the Financial Management Service’s monthly budget statement.


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.