Less than a fifth of a cent separated the euro from the week’s joint losers, the US dollar and the pound. The single currency fell by an average of -0.5% against the other dozen most actively-traded currencies. There were two angles to the euro’s problems. One was the Euroland economic data, which were more inclined to disappoint than to impress. Notably, fourth quarter growth for both the euro zone and Germany came in below forecast at a provisional 0.4%, lagging the United States’ 0.5% and Britain’s 0.6%. The other irritant was politics, with right-wing anti-EU candidates continuing to lead the polls in France and the Netherlands.
The dollar’s problems related principally to Donald Trump’s anarchic cabinet and to his “I’m not ranting and raving” press conference on Thursday. Sterling’s were down to the UK ecostats: inflation was lower than expected at 1.8% and wage growth slowed from 2.8% to 2.6%.
Ecostats from the States were mostly in line with or better than expectations and the Federal Reserve chairperson told Congress that interest rates would rise further this year. Such a combination would normally have taken the dollar ahead but investors refused to follow the script. Their misgivings appeared to relate to the disarray in which the new administration has found itself and to Donald Trump’s “I’m not ranting and raving” press conference.
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