Foreign Exchange News
15 July 2013

EUR Steady Despite a Fragile Eurozone

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EUR/USD 1.3055
GBP/USD 1.5081
GBP/EUR 1.1553 (0.8660)
EUR/CHF 1.2373
GBP/CHF 1.4295
GBP/AUD 1.6565

We have experienced plenty of volatility in FX markets over the last few weeks and indeed months and this may be the week things quiet down as summer trading conditions settle in. Today’s economic calendar is non-existent in the European session with Retail Sales and one Fed speaker due in the US session.

Overnight Chinese GDP figures for Q2 came in worse than expected increasing concerns of a hard landing for the emerging super power, which will have knock on concerns for Australia and also global growth. Markets have been expecting weaker and weaker figures from China so despite figures slightly worse than expected there was some positivity seen in related currencies, although the long term implication of such a reaction are concerning, if confidence remains so subdued for china a crash could well be self-fulfilling.

Any of our regular readers will be all too aware we have been warning of further fragility in the Eurozone, Fridays downgrade to France by rating agency Fitch highlights a difficult operating environment, this was the final downgrade from AAA for France with all major ratings agencies now one notch below. Fitch cited a failure to resolve their budget deficit and unacceptably high unemployment as some concerns.

Portugal is still struggling with a shaky government and the Spanish PM is embroiled in controversy once again with call for his resignation in relation to a payments scandal. The Portuguese government is still debating the government’s austerity plans with the opposition socialists resulting in a delay of the Troika process.

Later in the week we will have CPI data due from The UK, Eurozone and the US, the BOE minutes are due for release on Wednesday and the Fed’s Bernanke will speak to the House for his semi-annual policy report. All have the ability to rock markets, most notable the BOE minutes and Bernanke speaking on policy.

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