020 7898 0500Chancellor Merkel has been re-elected in Germany which is positive for the Eurozone. This should also be good news for the euro. However there does seem to have been a concerted effort to keep bad Eurozone news “out of the spotlight” for the last six months and over the next few weeks and months we are likely to see requests for additional funding for Greece, Portugal and others. We also have the likelihood of some of the banks having to be bailed out as there is be a detailed review of bank finances prior to the formation of a European wide banking regulator and there has so far been a lack of effort in the Eurozone to recognise the depth of the bad debt problem at some of their banks. The euro had a quiet day on Friday trading within a narrow range against sterling and the US dollar as little was released in the way of influential data. Despite little movement on the Friday, last week still proved to be a good week for the seventeen-nation currency as optimism returned to the Eurozone and considerable gains were made. A number of key data releases will help to determine euro performance this week, starting today with German and French flash manufacturing data being released. Growth is expected in both countries. At 2pm European Central Bank president Mario Draghi is testifying in Brussels and will give his current insight into the state of the Eurozone economy and his predictions for recovery. As president of the ECB, Draghi has a strong bearing on the strength of the single currency and therefore his words will be scrutinised when he speaks both today and again in Milan on Friday. Between these two appearances, markets are likely to react to the outcome of influential German sentiment data on Tuesday. Call your trader now to see how the euro performs in the eventful week ahead.
