Welcome to the Pure FX account of what’s affected the exchange rates over the weekend.
What steps will Super-Mario take? The Australian dollar is a cent higher against the pound today, as speculation mounts that European Central Bank president Mario Draghi will get stuck in this week, to save the euro. This boosted the Australian dollar because, in moments of global optimism, risk-based currencies like the Aussie tend to benefit most.
Last week in London, Mr. Draghi said he would do “whatever it takes” to rescue the embattled euro, assuring us “believe me, it will be enough.” Since then, speculation has been rife about what measures he’ll announce at this week’s meeting of the ECB. It could involve buying Spanish government bonds, to keep them reaching dangerous levels (i.e. anything above 7.0%.) It could be an interest rate cut, to levels below the 0.75% currently seen.
Of course, if the central banker is to bring out the big bazooka, he must overcome German opposition first. Over the weekend, German finance minister Wolfgang Schaeuble seemed to pour water on Mr. Draghi’s gusto, telling journalists “the world won’t end” if Spain pays above the odds for its bonds. Hence, if Germany pulls the brake on the ECB, that could disappoint the markets heavily, pulling down both the Australian dollar and the euro.
The European Central Bank has its meeting on Thursday.
Get in Touch
I do hope this post has been of interest.
To find out how this data has affected your foreign exchange transactions, call us on +44 (0) 1494 671800 or email firstname.lastname@example.org. You can also visit us at foreign exchange specialist Pure FX. We’d be delighted to help with your enquiry.