After putting in a fairly patchy performance last week as Eurozone construction output declined and the German economy failed to expand by as much as forecast.
The Euro was trading close to a two-month low against the US Dollar and a one-week low against the Pound as European trading got underway.
The Euro edged lower against Sterling as UK house prices rose in January. The Rightmove report showed that the value of British homes increased by 1.0 per cent in January, month-on-month, rather than stagnating as expected.
This result followed last week’s surprisingly strong UK retail sales report and lent the Pound additional support.
On Friday Moody’s Investment Service became the third major ratings agency to return Ireland’s credit rating to investment grade – a positive development for the Eurozone member – but the Euro was little affected by the news.
The common currency was also barely impacted by a report published this morning showing a surprise increase in German producer prices.
Although producer prices in the Eurozone’s largest economy unexpectedly climbed by 0.1 per cent in December month –on-month rather than stagnating as forecast, they were still down 0.5 per cent on the year, a fifth monthly YoY decline.
In reference to the Euro’s relationship with the Pound, forex strategist Georgette Boele stated; ‘Housing is relatively strong and is something on the inflationary side. It could be a reason for the Bank of England to be a bit more hawkish. We have a more optimistic outlook for the UK economy, above consensus compared to the Eurozone.’
However, while the Pound may maintain its bullish stance against the Euro today the common currency could stage a rebound tomorrow if sentiment data for Germany and the Eurozone shows the improvement expected.
Key events for the week ahead
Tuesday: German ZEW Current Situation Survey
German ZEW Economic Sentiment Survey
Eurozone ZEW Economic Sentiment Survey
Wednesday: Eurozone Third Quarter Government Dept
Thursday: German/Eurozone manufacturing and services PMI
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8241,
Euro,,US Dollar,1.3548 ,
Euro,,Canadian Dollar,1.4822,
Euro,,Australian Dollar,1.5409 ,
Euro,,New Zealand Dollar,1.6435 ,
US Dollar,,Euro ,0.7382 ,
Pound Sterling,,Euro,1.2136,
Canadian Dollar,,Euro,0.6743 ,
Australian Dollar,,Euro,0.6498 ,
New Zealand Dollar,,Euro,0.6069 ,
[/table]
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