Over the course of last week the Euro put in a pretty mixed performance as economists digested several pieces of influential economic news for the Eurozone.
While the Eurozone’s services PMI and investor confidence reports showed improvement, inflation concerns were exacerbated on Tuesday.
However, Euro losses were limited as German retail sales/employment data impressed and German factory orders surged.
The European Central Bank’s decision to leave interest rates unaltered and refrain from any policy adjustment also lent the common currency support, although the ECB President did reassert the central bank’s commitment to keeping policy accommodative for as long as necessary.
Gains against the US Dollar were aided by the news that the US economy added considerably less jobs than forecast in December while a measure of economic optimism for the world’s largest economy declined.
Similarly, the appeal of the Pound was lessened by surprisingly poor manufacturing/construction/industrial output figures for the UK and the Euro capitalised on its currency cousin’s losses.
Over the next few days EUR/USD movement will be driven by developments in the US as much as by home grown data.
Further disappointing US reports will add to the case for the Federal Reserve refraining from tapering stimulus in the months ahead, keeping the US Dollar trading lower against its rivals.
Meanwhile, the Pound could recover losses against the Euro if this week’s UK retail sales/inflation figures show improvement.
Tomorrow’s inflation report is expected to show a 0.5 per cent increase in consumer prices in December following a 0.1 per cent gain in November.
Friday’s retail sales data is forecast to show a monthly sales gain of 0.3 per cent, with sales being up 2.5 per cent on the year.
The Eurozone data most likely to inspire Euro movement over the next five days is likely to be the German growth figure and the ECB’s monthly report.
Our Euro currency forecast for the week is that the EUR/USD pairing will enjoy a neutral outlook while the EUR/GBP pairing adopts a neutral-negative stance.
Key Eurozone data for the week ahead:
Tuesday: German Wholesale Price Index
Eurozone Industrial Production
Wednesday: German GDP 2013
Eurozone Trade balance
Thursday: German Consumer Price Index
ECB Monthly Report publication
Eurozone Consumer Price Index
Friday: Eurozone Construction Output
Euro Exchange Rates Today
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6438 ,
Pound Sterling,,Euro,1.2037 ,
Pound Sterling,,Australian Dollar,1.8177 ,
Pound Sterling,,New Zealand Dollar,1.9741 ,
US Dollar,,Pound Sterling,0.6093 ,
Euro,,Pound Sterling,0.8308 ,
Australian Dollar,,Pound Sterling,0.5501 ,
New Zealand Dollar,,Pound Sterling,0.5067 ,
[/table]
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