The Pound may be trading in a narrow range due to a lack of UK news, but the same can’t be said for the Euro.
The common currency experienced modest fluctuations today following the publication of influential Eurozone reports.
As European trading kicked off the Pound was still trapped below the key 1.20 Euro level as the European Central Bank’s decision to refrain from introducing additional stimulus continued to lend the Euro underlying support.
However, while Germany’s wholesale price index had little impact on the common currency, the asset was pushed lower against some of its peers following the release of disappointing confidence figures.
The ZEW economic sentiment gauge for the Eurozone slipped from 68.5 in February to 61.5 in March.
Meanwhile, Germany’s economic sentiment measure tumbled from 55.7 to 46.6 instead of coming in at the 52 expected by economists. This was the third consecutive monthly decline.
The ZEW index for the current situation in Germany advanced from 50 to 51.3 in March, a lower reading that the 52 projected.
German growth and employment figures may be indicating that the Eurozone’s largest economy continues to weather the global economic storm, but the impact of a slowdown in China (one of the currency bloc’s major trading partners) and the uncertain situation in Crimea are clearly having an impact on investor confidence.
Persistent inflation woes in the Eurozone as a whole are also wearing on Germany.
According to Bloomberg News, economist Frederik Ducrozet asserted that as investor sentiment had achieved almost record levels last year, ‘it could have reached a cyclical high. It would suggest that the German economy may find it difficult to re-accelerate from here, especially if foreign demand continues to slow down. Recent concerns about China and the Ukraine might have weighed on sentiment’.
However, ZEW President Clemens Fuest did state that ‘the indicator’s level suggests that the economic upswing is currently not at risk.’
Meanwhile a separate report showed that the Eurozone’s trade balance produced a smaller than expected surplus in January compared with the same period of 2013.
Falling imports and a small gain in exports saw the currency bloc record an external trade surplus of 900 million Euros in January.
Economists had expected a surplus of 12 billion Euros.
In December the Eurozone’s surplus stood at 13.8 billion Euros.
After the data was published the Euro eased slightly lower against the US Dollar but continued trading higher against the Pound, ‘Aussie’ and ‘Kiwi’ ahead of tomorrow’s Eurozone construction output figures.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8379
Euro,,US Dollar,1.3915,
Euro,,Canadian Dollar,1.5371,
Euro,,Australian Dollar,1.5323,
Euro,,New Zealand Dollar,1.6248 ,
US Dollar,,Euro ,0.7186,
Pound Sterling,,Euro,1.1937,
Canadian Dollar,,Euro,0.6516,
Australian Dollar,,Euro,0.6525,
New Zealand Dollar,,Euro,0.6165 ,
[/table]
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