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Inside Euro's Strength in 2025: What's Ahead for ETF FXE?

Yahoo

09-07-2025

Business
Yahoo

Inside Euro's Strength in 2025: What's Ahead for ETF FXE?

The euro is expected to strengthen in 2025, thanks to political dynamics and economic policy shifts that are fueling gains against the U.S. dollar. While the euro may not unseat the dollar as the dominant global reserve currency, European Central Bank (ECB) officials suggest its status as a stable alternative is on the rise—particularly with robust policy support from EU institutions, as quoted on CNBC. According to an ECB report from June, the euro's share of global foreign exchange reserves has remained steady at about 20% over the past decade. In contrast, the U.S. dollar's share fell from 68.8% in 2014 to 57.8% at the end of 2024. The 2025 figures are still developing. Invesco CurrencyShares Euro Trust FXE has gained more than 14% so far this year while Invesco DB US Dollar Index Bullish Fund UUP has lost more than 8%. The outcome of ongoing U.S.–European Union trade negotiations remain unclear as of now. Washington's recent trade pacts—with the U.K. and Vietnam—suggest a general trend toward higher tariffs on imports, albeit lower than previously threatened levels. Uncertainty around these tariff policies, coupled with fears of inflation and sluggish economic growth, has driven the euro up by about 14% against the dollar in 2025. This rise has occurred even as the ECB cut interest rates and the Federal Reserve held rates steady. Last week, President Donald Trump achieved the passage of a sweeping tax and spending bill. While this move has energized domestic supporters, it is likely to increase the federal deficit—raising concerns among global investors already unnerved by erratic tariff policies. 'The dollar's status won't shift overnight,' Stournaras acknowledged, 'but the euro is increasingly being viewed as viable for international reserves.' He stressed the importance of completing EU financial integration through a Banking Union and Capital Markets Union to fully unlock the euro's potential, as quoted on CNBC. Looking ahead, the euro-dollar exchange rate is expected to remain volatile, due to developments in tariffs, central bank policy, and global risk factors. Yet analysts remain optimistic about the euro's resilience. The Eurozone economy expanded by 0.6% in the first quarter of 2025, doubling the earlier estimate of 0.3% and marking the strongest growth since Q3 of 2022, driven by Ireland's exceptional 9.7% surge and a stronger-than-initially-reported performance from Germany. Such upbeat GDP data also contributes to the euro's strength. Deutsche Bank strategists George Saravelos and Christian Wietoska said that the U.S. dollar is weakening because foreign investors are no longer buying as many U.S. assets. They recently noted that while investors don't need to sell, but just choosing not to buy more is sufficient to put pressure on the dollar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports Invesco CurrencyShares Euro Trust (FXE): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

China Inc bets Beijing will keep tight grip on yuan as US tariff fears persist

Zawya

08-07-2025

Business
Zawya

China Inc bets Beijing will keep tight grip on yuan as US tariff fears persist

Chinese businesses and investors are primed for the yuan to stay steady for now and eventually depreciate as U.S. trade tensions drag on, and a string of measures and hints from monetary authorities suggest they may be on the money. A growing pile of foreign exchange deposits at banks and a rise in currency swaps show Chinese corporates and households are wagering they can exchange their dollars for more yuan if they wait. That conviction, in the face of the U.S. dollar's broad-based slide against most other currencies, is driven for the most part by central bank's efforts to keep the currency steady and even encourage more investment offshore. It also shows the People's Bank of China (PBOC) is in a bind. A sudden yuan move in either direction could trigger a wave of selling of billions of dollars by businesses and households, either to catch better yuan levels or to stave off losses. China's yuan has strengthened 1.5% against the flagging dollar since April 2, when U.S. President Donald Trump announced punishing trade tariffs on scores of countries, leading to market ructions that have eroded confidence in U.S. economic policymaking and the dollar's haven appeal. In the same period, currencies such as the Thai baht, South Korea's won and Taiwan dollar have risen between 6% and 14%. The yuan has spent most of 2025 in a narrow range between 7.15 and 7.35 to the dollar, its weakest levels in 4-1/2-years in trade-weighted terms. The export sector, comprising a fifth of economic growth, is grappling with higher U.S. import tariffs of as much as 55% going by the latest trade framework agreed between the world's two biggest economies in early June. China was initially singled out with tariffs exceeding 100% and has until August 12 to reach an agreement with the White House to keep Trump from reinstating additional import curbs imposed during tit-for-tat tariff exchanges in April and May. "Considering the external risks from U.S. trade policies, China needs to maintain a very competitive currency with respect to other markets outside the U.S.," said Eugenia Victorino, head of Asia strategy at SEB. PBOC SIGNALS The PBOC did not respond to a Reuters request for comments. Since May, it has managed its daily yuan "guidance" settings to indicate it doesn't desire too much strength in the yuan. It has also signalled willingness for mainland investors to shift some of their money from low-yielding onshore markets to stocks and bonds in Hong Kong, which some analysts suspect is to generate some selling pressure on the yuan. Authorities approved a fresh $3.08 billion quota for domestic institutions (QDII) to invest in overseas assets in June. On Tuesday, the PBOC said the southbound leg of the Bond Connect scheme, which enables institutions on the mainland to access Hong Kong's bond market, will be expanded to brokerages, insurers, mutual funds and wealth managers. China's central bank also surveyed some financial institutions last week asking them about their views on recent U.S. dollar weakness, sources told Reuters on Monday. "The PBOC has been prioritising currency stability for quite some time, so while most of the focus the past couple of years has been on preventing rapid depreciation, this also applies to manage the pace of appreciation as we're now seeing," said Lynn Song, chief economist for Greater China at ING. "My forecast band for this year was set at 7 to 7.4, and I believe it is likely that this band will still hold through the year." Unsurprisingly, rampant dollar hoarding by Chinese businesses has continued, encouraged also by the high yields on U.S. dollar assets. Foreign exchange deposits grew $137.2 billion in the first five months of this year, or 19% year-on-year, to $990.1 billion at end-May, PBOC data showed. Reuters calculations showed the conversion ratio - a gauge that measures households' and corporates' willingness to sell dollars for yuan - has slipped. Wary of missing out on potential gains from yuan depreciation, exporters have turned to currency swaps to temporarily obtain yuan. Commercial banks facilitated $277.5 billion of currency swaps on behalf of their clients between January and May, a 10% increase over the same period last year, according to data from regulators. (Reporting by Reuters Staff Editing by Vidya Ranganathan and Kim Coghill)

IMF to combine reviews of Egypt's $8bln loan program

Zawya

04-07-2025

Business
Zawya

IMF to combine reviews of Egypt's $8bln loan program

WASHINGTON: The International Monetary Fund on Thursday said it would combine the fifth and sixth reviews of Egypt's $8 billion support program this fall to give authorities more time to meet critical objectives of its economic reform program. IMF spokeswoman Julie Kozack told a regular briefing that IMF staff were working with Egyptian authorities on finalizing key policy measures, particularly on the state's role in the economy. A decision to combine the reviews, first reported by Reuters on Tuesday, could delay a new disbursement of funds to Egypt by half a year. Kozack said it was premature to discuss the level of any expected disbursement related to the combined reviews. The International Monetary Fund approved its fourth review of the program in March, unlocking a disbursement of $1.2 billion and bringing total disbursements to about $3.5 billion. The 46-month facility was signed in March 2024 following more than a year of severe foreign currency shortages and inflation that peaked at 38% in September 2023. Kozack said an IMF team met with Egyptian officials in Cairo May 6 to 18 for what she called "productive" discussions. "Egypt continues to make progress under its macroeconomic reform program, and we can say that there's been notable improvements in inflation and in the level of foreign exchange reserves, which have increased," she told reporters. However, she said, Egypt needed to deepen its reforms, reduce the state's footprint in the economy and improve the business environment to safeguard macroeconomic stability and bolster resilience. "Key priorities are advancing the state ownership policy and asset diversification program in sectors where the state has committed to withdraw," she said, adding such steps were critical to enabling the private sector to drive stronger and more sustainable growth. Staff discussions with authorities suggested that "more time is needed to finalize the key policy measures, particularly related to the state's role in the economy," Kozack said. (Reporting by Andrea Shalal; Editing by Cynthia Osterman)

As PM urges new tourism push, Swat river tragedy raises alarm over tourist safety

Arab News

30-06-2025

Arab News

As PM urges new tourism push, Swat river tragedy raises alarm over tourist safety

ISLAMABAD: Prime Minister Shehbaz Sharif on Monday directed Pakistan's tourism authorities to take immediate steps to boost the country's international profile as a travel destination, including launching a global branding campaign, creating special tourism zones and attracting long-term investment in the sector. While the prime minister did not refer to it during a Monday meeting on tourism development, his comments come just three days after a deadly flash flood in the scenic Swat Valley killed 13 members of a single tourist family. According to rescue officials in the Khyber Pakhtunkhwa province where Swat is located, 17 family members were swept away in the Swat River on Friday during a sudden rise in water levels caused by monsoon rains. Twelve bodies had been recovered as of Sunday, with search operations ongoing for the final missing person. The incident drew widespread condemnation in the media and online over what many called a slow response by emergency services. 'Pakistan's tourism sector holds unlimited potential to earn foreign exchange,' the prime minister said at Monday's meeting, according to a statement from his office. 'God Almighty has blessed Pakistan with natural resources and timeless beauty.' Pakistan offers a diverse range of tourism attractions, drawing visitors with its dramatic landscapes, rich history, and vibrant culture. From the snow-capped peaks of the Himalayas, Karakoram, and Hindu Kush in the north, home to some of the world's highest mountains like K2, to the ancient ruins of Mohenjo-Daro and Taxila, the country blends natural beauty with archaeological significance. The Hunza, Swat, and Skardu valleys are popular for trekking, mountaineering, and scenic retreats, while cities like Lahore, Karachi, and Islamabad offer a mix of Mughal architecture, bustling bazaars, colonial-era landmarks, and modern urban life. Religious tourism is also growing, with sites such as Kartarpur for Sikh pilgrims and the Buddhist ruins in Takht-i-Bahi. Pakistan's coastline along the Arabian Sea, its deserts, forests, and diverse cultures make it a unique destination with year-round tourism potential. Sharif directed the Pakistan Tourism Development Corporation to move swiftly on plans to showcase the country abroad as a tourism brand, stressing public-private partnerships and stronger federal-provincial coordination to develop tourism infrastructure across the country. 'With snow-covered mountains, forests, rivers, as well as plains and desert areas, our country is not behind any nation in the world in terms of tourism,' Sharif said. 'Under the vision for national development, we will place Pakistan among the world's leading tourist destinations.' Officials at the meeting briefed the prime minister on proposals to promote medical tourism, develop recreational areas and improve access to northern tourist regions. Sharif emphasized encouraging domestic tourism alongside international promotion. 'Special measures should be taken to encourage domestic tourism and the arrival of local tourists at recreational spots,' he said. 'Planning should be done to ensure long-term investment in the tourism sector.' Since Friday's tragedy in Swat, videos widely shared on social media have showed tourists stranded on rocks midstream, shouting for help as floodwaters surged. Survivors have widely said rescue services took hours to reach the scene. The incident has sparked criticism over disaster preparedness in tourist areas. The disaster was part of a broader wave of flash flooding across northern Pakistan last week, which has killed at least 32 people, according to rescue agencies. Weather officials have warned of above-average monsoon rains this year, raising further concern over the vulnerability of tourist destinations in mountainous areas. Forecasters say they cannot rule out a repeat of the 'extreme situation' seen during devastating floods in 2022 when rains inundated a third of the country, killing 1,737 people and causing widespread destruction.

SNB Stayed Out of FX Market as Franc Slumped in First Quarter

Bloomberg