Euro rises as investors hope on ECB to wind down its stimulus policy

G7 summit impacting mainly CAD

The exchange rate of Euro was not impacted by the highly worrying G7 summit that took place in Canada. A dispute on global trade broke out between the US President Donald Trump and other leaders of the wealthiest countries in the world. The issue that differentiated the leaders were automobile tariffs, among others. Trump blamed Canada and European countries for the US trade deficit, as he commented on Monday after arriving in Singapore to meet with North Korean leader Kim Jong Un in what will be a historic moment. The Canadian dollar highly reacted to the G7 summit, as it fell 0.3 percent against the US dollar, to 1.2960 CAD. Canadian investors are also worried about the North American Free Trade Agreement, whose future is looking blunt as Trump may scrap the deal. The other currencies though, did not react to the G7 summit’s tense atmosphere. It might prove that markets did not have some high hopes for that reunion in the first place.

ECB’ policy meeting

Even though the Euro is sensitive to possible US tariffs on vehicles, there were lot of other news that made the common currency actually bounce back from 10-months low it has hit recently. First of all, investors were eager to buy euro, as the political turmoil in Italy was solved out. There was a real danger of the early election, but the crisis is over now and one of the biggest economy in Europe finally has a government. What is even more comforting for investors is the re-appearing hope for the ECB’s decision to cut down its bond-buying program. There is possibility that the Thursday’s policy meeting will signal the end of the broad stimulus program by the end of the year. As the officials offered some rather hawkish comments last week, speculations that the ECB will give a specific date of unwinding of its program mounted. It came as a bit of a surprise as so far the officials were very cautious in commenting the future of the policy program. The Euro exchange rate against the dollar was at 1.1816 USD, 0.4 percent up.

Swiss voting on financial laws

The Euro also took advantage of Sunday’s voting in Switzerland and rose against the Swiss Franc, the safe haven currency. The EUR/CHF exchange rate on Monday was 1.162 francs, down 0.3 percent. Swiss voted on introduction of gambling law and sovereign money initiative. Voters rejected the idea to introduce sovereign money plan that would mean commercial banks would not be able to create digital money to lend to customers if they don’t have cover in deposits. Only the central bank would be entitled to issue money. That revolutionary idea, which is not present in any country in the world, was given a red light by more than three quarters of voters in Sunday’s referendum.

UK awaits manufacturing data

The British Pound rose against the US dollar as the manufacturing data to be published later in the days, is widely expected to indicate recovery of the industry sector in the second quarter. The British Pound gained 0.1 percent to 1.342 USD. It was still below last week high point of 1.3472 USD. The exchange rate of EUR/GBP was at 87.93 pence, 0.2 percent down. The manufacturing data is believed to show a 0.3 percent rise in April, as compared to 0.1 percent fall in the previous month. Still, the optimism of investors in the UK is limited as Brexit continues to overshadow everything. There are analysts’ expectations that the British currency will remain on the sideways until the vote of British Parliamentary on amendments to Brexit deal, that is supposed to take place on Tuesday.

For Swiss cross-border commuters (frontaliers) and the Swiss import SMEs this means waiting. It was not until the end of May that we were able to record the best euro exchange rate in recent months. The good euro-franc exchange rate has made euro cheap to buy and francs to sell. If you are looking for the best EUR CHF exchange rate, in our currency converter you can compare the exchange rates of different banks and see where you can find the best Euro Franc exchange rate to buy Euro and to sell Francs or, alternative, to buy Francs and sell Euro.