020 7898 0500This week saw a relatively positive tone for the Eurozone in general, although some individual countries had a more difficult time. The euro continued to strengthen against the dollar, reaching its highest level since December, but this is mainly on the back of US dollar weakness rather than euro strength.
European consumer price inflation data beat expectations this week, and neared the ECB’s 2% target, but this inflation milestone was slightly overshadowed by the German equivalent coming in under expectations. The Eurozone’s biggest economy also saw retail sales and key manufacturing PMI fail to match expectations, with the former surprisingly falling by 0.9% in December.
Yesterday’s speech by ECB President Draghi focused on the benefits of staying in the Eurozone (and maintaining the single-currency) and lacked any distinct monetary policy hints. He also pushed back on comments which suggested the euro was at fault for the lack of growth in certain Eurozone countries, stating ‘low productivity growth’ was due to ‘deep-rooted structural problems’ and not the currency.
Political headwinds remain at the forefront of traders’ minds with the French elections nearing and the corruption probe surrounding the front-running candidate Fillon.
Today sees another raft of PMI data, this time for the services sector. Data from Germany, France, Italy and Spain will be released, as well as data for the Eurozone as a whole.
