EUR

If we look at the historical EUR-USD chart since 2005, we can see that the exchange rate curve is within a channel with a negative inclination, and the top of […]

US dollar weakness at the end of 2017 and the start of 2018 has made it clear that traders are going to have to be careful with dollar futures. On Friday, 12thJanuary 2018, the euro was trading at 1.2202 against the US dollar with an increase of 1.41% for the day (+0.0170). That the dollar is weakening seems odd as the Fed has clearly given forward guidance for three more interest rate increases in 2018. Given that, one would expect a stronger dollar especially as QT (Quantitative Tightening) has only begun.

This year the Euro zone economy expanded at a strong pace. Do you expect the ECB to start tapering anytime soon or not?

We do expect the October announcement to reveal that the ECB is extending its QE program into the next year, however, at a slower pace, which the ECB itself does not describe as tapering. We would call it a rescaling or recalibration. But overall we do think that conditions are met for asset purchases to be slowed and eventually terminated by the end of the next year.

Some analysts suggested that the strong Euro had a little impact on trade between the EU and the major economies. Do you agree with the statement?

– After an especially strong first quarter (+1.9% year-on-year), growth surprised once again in the second quarter (+2.2%). This pace is above potential and above its 2010-2015 average.
– Credit growth remains solid and beneficial to both companies and households
– Order books and economic surveys suggest that the positive trend will continue
– The political environment has become favourable after elections in France and the Netherlands

The European Central Bank’s (ECB) July policy meeting has ended with policy-makers opting to maintain a cautious tone, presumably to keep a lid on rising Eurozone interest rates and currency.

The ECB kept its deposit rate deep in negative territory and maintained monthly bond purchases at €60-billion, in line with the expectation of most analysts in a Reuters poll.

The European Central Bank (ECB) said it will set up an instant payment system across the eurozone allowing consumers and firms to send money "within a matter of seconds".

The new service, TARGET instant payment settlement (TIPS), will enable citizens and firms to transfer money between each other in real time and will be available around the clock, 365 days a year.
It said the new network "will allow citizens and firms to make payments via their bank anywhere in the euro area within a matter of seconds", and is scheduled to come into operation in November 2018.

According to the latest reports, the European economy grew at a stronger pace than the US economy did. Do you agree that further trend is going to be the same?

I do not think so, though it is mostly because the US is likely going to pick back up again. What we saw in the first quarter, and this is something we have seen over the past few years, is that the US has a relatively weak first quarter. This could mean that growth is not going to be as spectacular as it has been over the past years in the United States. Nevertheless, I would say that, overall, the US economy is likely to pick up steam again in the Q2 and Q3. On the other hand, the Euro zone economy is performing quite steadily, while growth is sweeping quite robust at the moment. Still, I do not think that it will be able to keep up with the pace that we have seen in the United States. Currently, we expect the Euro zone growth to come in just under 2% over the year, while we think the United States GDP could hit 2.3% or maybe even 2.5% in 2017.

The idea of Italy leaving the eurozone, or ‘Italexit’, "does not have the slightest basis" in fact, European Central Bank President Mario Draghi said Wednesday in a verbal tussle with a Dutch MP. Draghi repeated that the euro is "irrevocable, and that’s what the Treaty says".

Confronted with the possibility of the Netherlands quitting Europe’s monetary union by Eurosceptic MP Thierry Baudet, an angry Mr Draghi said: “The euro is irrevocable. This is the treaty. I will not speculate on something that has no basis.”

Highlighting the ECB’s role in the eurozone’s economic recovery, he said policies had helped create 4.5m jobs. “That’s the reality, the rest is speculation." In other remarks, Draghi said it was "up to the eurozone countries to prepare for the end of quantitative easing".