The Euros continuing slide into oblivion seems to have been temporarily halted over the past couple of days as the 17 nation currency has clawed back some of its recent losses to the Dollar and Yen. This morning’s German GDP data saw growth in Europe’s largest economy come in at 3% which was exactly as the market expected and firmly applied the brakes to the Euros overnight slide downwards. EUR/USD moved down into the 1.2730’s overnight before recovering back to 1.2780 this morning after the release of the German data. I still feel these small bouts of recovery will be short lived and I will be looking for further Euro weakness short term.
Looking over the next couple of months it would be my feeling that GBP/EUR and EUR/USD will cross over in rate at a predicted level of 1.23/1.24. The first quarter of this year will be a testing time for the Euro and I feel that over the next six to eight weeks we could see maybe another two credit rating downgrades for Eurozone nations. Leading the betting in the downgrade stakes for me is Italy at present and I feel that the Eurozones third largest economy is struggling even more than most realise.
Today’s big news will be the release of the US Fed’s Beige Book which will be released at 7pm tonight. The Beige Book isn’t as bland as it sounds as it reports on the current US economic situation and with the way recent data has been so positive I don’t see why the current economic situation shouldn’t be viewed with some optimism.
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