As the week began the Euro declined against its peers in response to comments issued by European Central Bank President Mario Draghi. On Tuesday the Euro consolidated declines against the Pound following mixed German data.
While a measure of the current situation in Germany showed improvement, edging up from 51.3 in March to 59.5 in April, the gauge of expectations for the region dropped from 46.6 to 43.2 in the same period.
Similarly, the ZEW economic sentiment survey for the Eurozone as a whole dropped from 61.5 to 61.2.
The slip in investor confidence in Germany was the fourth monthly decline this year and is indicative of the headwinds still threatening to derail economic growth in the Eurozone’s largest economy.
While the tenuous situation in the Ukraine could be cited as one of the reasons for the dip in confidence, deflation fears and uncertainty surrounding ECB fiscal policy ate also having an impact.
Meanwhile, ZEW analysts found that the Euro’s exchange rate isn’t causing German investors much concern.
According to one ZEW economist; ‘We don’t see a particular indication that the situation is getting worse. Most respondents think the Dollar will appreciate against the Euro. Looking at the different industries, we don’t see a negative value for export-oriented industries.’
However, trade figures for the Eurozone (also published today) were fairly positive.
A 3 per cent annual increase in Eurozone exports and stagnation in imports helped the foreign trade surplus swell from a revised 0.8 billion Euros to 13.6 billion Dollars.
But, in spite of this encouraging report and the fact that UK consumer price inflation remained below the Bank of England’s 2 per cent target, the Euro weakened against the Pound.
The common currency also fell against the US Dollar for a third day as investors dwelt on yesterday’s remarks from ECB President Mario Draghi.
Draghi observed that while the ‘exchange rate is not a policy target’ for the central bank, it is ‘important for price stability and growth. And now, what has happened over the last few months, it’s become more and more important for price stability’.
The ECB’s hints that the central bank might introduce additional stimulus if the Euro exchange rate remains high saw the common currency broadly decline and it still hasn’t found its feet again.
Tomorrow Euro to GBP fluctuations will be driven by UK employment figures and Eurozone inflation data.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8249,
Euro,,US Dollar,1.3802,
Euro,,Canadian Dollar,1.5197,
Euro,,Australian Dollar,1.4750,
Euro,,New Zealand Dollar,1.6002,
US Dollar,,Euro ,0.7246,
Pound Sterling,,Euro,1.2124,
Canadian Dollar,,Euro,0.6586,
Australian Dollar,,Euro,0.6781,
New Zealand Dollar,,Euro,0.6250,
[/table]
Comments are closed.