After posting yearly highs against most of its currency rivals the Euro has begun to slow in its ascent upwards and start to fall as the Euro crisis rears its ugly head once again.
For a time it appeared as though European Central Bank Governor Mario Draghi’s plan to talk up the single currency had succeeded. The Euro’s strength saw it put the boot into the Pound and soar against the rest of its rivals. Investors and traders alike flocked back to the Euro believing the rhetoric being spoken by the ECB and other European leaders. ‘The Euro crisis is over’ some cried, ‘the worst is behind us’ said others.
The second comment may be true but the first certainly isn’t.
Thursday’s GDP data from the region saw the Eurozone economy contract by its highest margin since the height of the financial crisis in 2009. The disappointing GDP data combined with Wednesday’s record high unemployment data out of Portugal to weigh down the Euro. Even the regions two biggest economies, France and Germany posted larger than expected contractions, increasing concerns that the crisis has spread to the heart of Europe.
Spain proved to be one of the main causes for weighing down the Euro after Prime Minister Mariano Rajoy was caught up in the heart of a corruption scandal. Rajoy has been forced to deny that his ruling People’s party is at the heart of a corruption scandal, refuting claims that he received underhanded payments made by business donors and other party leaders.
The strength of the Euro means that now is a great time to sell the currency but due to the number of potential factors that could weaken the currency its probably best to do it sooner rather than later.
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