Following the results of the Scottish vote on independence on Friday we saw the euro eliminate all gains it had achieved the previous week, dropping back to two-year lows against sterling and 14-month lows against the US dollar. The outlook seems increasingly bleak now for the single currency, as its two most significant peers look to be strengthening further.
Against sterling, the medium-term upside is difficult to predict, but a few forecasters are suggesting we could push through 1.30 before 2015. Eyes will be on this afternoon’s speech from European Central Bank Governor (ECB) Mario Draghi. Traders will be looking for hints from Draghi surrounding any plans for quantitative easing, with bonds and asset-back securities purchases rumoured, given the poor uptake by the banks of the ECB’s cheap loans last week. We also have a raft of Purchasing Manager Indices (PMI) for the Eurozone and individuals countries released this week which will highlight that Eurozone is just about in expansion mode although individual countries, such as France, the PMI will show that their economies are not growing. Later in the week we have manufacturing industry figures from France and Germany, as well as economic health figures from Germany on Wednesday.