The ECB is widely expected to implement QE on Thursday 22nd January. A chunk of change to the tune of 500-600 Billion EUR is likely to be injected into the market in the form of QE (The creation of money to buy sovereign bonds with the aim of spurring growth and inflation). With the Eurozone experiencing deflation (falling prices) and lurching from one disaster to another Mario Draghi has sought to follow the US and UK example. How will the markets take it? Anything less than a large injection will leave the market disappointed. When that happens out comes volatility. Couple the ECB meeting tomorrow with the small event of Greek elections on the 25th January then there is plenty reason to think EUR crosses are going to be extremely volatile for the remainder of this week and overnight on Sunday.
- What should you do if you have a EUR exposure? Contact myself or one of the trading team to discuss various strategies.
- I would suggest if you are a EUR buyer you should implement a market order to take advantage of any significant move higher. Contact me to discuss appropriate levels.
- With the GBP/EUR rate at levels last seen when Britney Spears was on the television it is a pretty good time to lock in some EUR either on a SPOT or Forward Contract.
Please contact me with any questions.
Written by Liam Alexander