020 7898 0500The euro started the week in a relatively uneventful fashion as run-of-the-mill data releases did little to inspire market movements. However, the decision by the European Central Bank (ECB) to reduce interest rates from 0.5% to 0.25% caused the euro to depreciate significantly. There had been some speculation suggesting that interest rates might be reduced, but the majority were of the opinion that such a reduction was likely to take place in December. This unexpected fall meant that the sterling – euro exchange rate shot up and reached its highest level since January, whilst similar movements against the US dollar made this the single currency’s biggest fall in two years. ECB President Mario Draghi stated that the Eurozone may face a prolonged period of lower inflation, which further contributed to the euro’s weak showing. The seventeen-nation currency pulled back some ground towards the end of the afternoon, but still ended the day in a considerably weaker position from where it started. Today’s data releases include German trade balance data and French industrial figures, however the fallout from yesterday is likely to dominate market chatter. Call your trader now to see how these movements affect you.
