Friday, 24 March 2017
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Euro Weekly Update

It was almost a single-issue week for the euro, that issue being the possibility that Geert Wilders' anti-everything nationalist party could do well in Wednesday's Dutch general election. Were he to do so it would, supposedly, pave the way for an even bigger anti-EU upset in next month's French presidential election. It didn't, and the status quo was preserved. The euro enjoyed a relief rally as soon as the exit polls were revealed.

Sterling had a topsy-turvy week swinging back and forth across a one-and-a-half-cent range, often for no clear reason. It was hurt by weak UK production data and by a further slowdown in the pace of wage increases and helped by one of the Monetary Policy Committee members unexpectedly voting to increase the Bank Rate.

The two big events in the dollar's week were last Friday's US employment report and Wednesday's interest rate announcement by the Federal Reserve. Both had been eagerly awaited and both were, ultimately, costly to the dollar. The strong rise in nonfarm payrolls, which beat forecast by a net 54k, was not impressive enough. The Fed's quarter-percentage-point rate increase had been so widely discounted that it came as an anticlimax when it was at last announced.

The net result was a euro that was unchanged on the week against sterling. It added a cent and three quarters against the US dollar, which was the weakest among the major currencies.

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