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Busy Week of Data Begins With A Stronger Euro

1 February 2016

The Euro is gaining ground versus the US dollar during the morning sessions in Europe. The exchange rate moved up to 1.086 dollars, higher than the close of 1.083 dollars on Friday evening. It’s the start of a busy week with statistics, especially with the US employment report on Friday.

The US dollar is currently under strong pressure against major currencies like the euro and a continuation of the upward trend cannot be achieved only through excellent job figures. Investors may see good numbers of non-agricultural jobs as a positive sign for an upcoming rate hike, which would have a direct result of appreciation of the dollar against the euro.

The Yen continues to lose ground against other major currencies, still under the effect of the decision by the Bank of Japan to adopt a negative deposit rate of -0.1% last Friday.

“We will cut the interest rate further into negative territory if judged as necessary”, the Bank Of Japan stated in a press release after their two-day meeting on fiscal policy. This move by the BOJ has underpinned a lot of losses that were happening around the globe in early January, whether it can hold off the bears long term is another matter.

Finally, EUR/GBP has settled, from 0.1% to 0.760: the British Pound is enjoying a manufacturing growth that has accelerated slightly in the UK, in the light of a Markit / CIPS increased from 52, 1 to 52.9 from month to month.

Whilst GBP rates seem to have stabilized from early January falls, there is still anticipation on a broader scale that rate hikes could be on the horizon if the economy in 2016 starts to make better shape. Although it now seems the US Federal Reserve may halt any subsequent rate hikes for a small while, thoughts are that the UK could follow suit with a first hike towards the backend of the year. The picture will become clearer as data continues to flow during Q1.

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