Neil Davies, Head of Trading at PlutusFX, sees the euro slide quickening.
The fall in the value of the Euro, particularly in its pair with the USD, has gained momentum this week. Just a week ago EUR/USD was as high as 1.276, and is now sitting at 1.263. Against Sterling the story was similar, though the last two days have seen a welcome respite, possibly no more than a short term retracement though, with GBP/EUR now at 1.2725.
In an effort to stimulate borrowing against a backdrop of member states falling into recession and deflation a real possibility, Mario Draghi has announced the commencement of the ECB’s asset purchase programme. Unlike other central bank’s policies in this regard, government debt won’t be on the buy list, but rather the purchases will be aimed directly at specific market sectors, with the purpose of directing support and encouraging banks to lend where it is most required.
There is much work to do though, with CPI across the Eurozone falling to 0.3% in September, its lowest rate for five years. Q2 showed stagnation across the zone with both Italy and Germany falling into decline. It would also appear that the outside view of the region may also be at a low. France in particular was picked on by the MD of John Lewis, who described the country as ‘hopeless’, advising British entrepreneurs with investment in the country to ‘get them out quickly’ as the country, where ‘nothing works and nobody cares’ was finished.
Coming from the head of the award winning retailer from Europe’s fastest growing economy, albeit said in a jocular fashion, perhaps those across the water should take note.