This afternoon saw the Euro weaken against most of its major counterparts following reports that the European Central Bank (ECB) are planning on extending their asset purchase programme or Quantitative Easing into 2018. This has been labelled as cautious tapering – the plan on buying less per month (€30bn) but until September 2018.

The Euro had been the investor’s choice of late, having had a strong run of performance against the Pound and notably the Dollar. This was due to reports that the ECB were considering stopping the asset purchasing scheme altogether by March 2018. The reason why an elongated period of QE is potentially damaging and will keep the Euro’s strength subdued is because the ECB have categorically said that they will not look at raising interest rates in the Eurozone until the QE programme has finished. If these reports are true, this could be in early 2019 at the earliest. All eyes will now turn to the ECB’s next meeting on the 26th October for the result.

How is potential Catalan independence affecting the Euro

The Euro is also being affected by political factors too. This coming Monday is the date set by Spanish President Rajoy for Catalan President Puidgemont to outline his position on the Catalan independence. Depending on Monday, the Euro could look very different. So far, Mr Puidgemont’s comments have been ambiguous, and if Catalan independence is declared, I would expect the Madrid response to cause Euro weakness. If anything a suspended autonomy is high likely.

The Euro is very much in focus at the minute, for a lot of the wrong reasons, and has the potential to lose value more than it has to gain value, in my opinion.