020 7898 0500The German Constitutional Court ruling on the legality of the European Central Bank (ECB)’s Outright Monetary Transactions (OMT) policy proved to be something of a damp squib on Friday as authority was effectively deferred to the European Court of Justice (ECJ). The OMT allows the ECB to do – as ECB President Mario Draghi promised – whatever it takes in terms of bond-buying in order to sustain the single currency. The ruling from the Constitutional Court had the potential to have a significant impact on the performance of the eighteen-nation currency, however this was avoided. As it was, Friday proved to be a mixed day for the euro as it lost ground against sterling, but gained against a weaker US dollar during the afternoon.
This week holds perhaps slightly less in terms of influential data releases. However, Draghi’s address at the European Monetary Institute Conference on Wednesday may play a role in determining movements in euro pairings as traders continue to wait for signs as to when and how the ECB President will combat the Eurozone’s deflation threat.
In addition to this, French Industrial Production data, which showed noted improvement in January, is set to be released on Monday. Eurozone flash growth figures are expected on Friday along with French preliminary non-farm payrolls. In terms of the latter, we saw this week the sharp effect that non-farm payrolls had on the performance of the US dollar, and the French figures also have the potential to impact performance towards the end of the week, especially as the French economy is struggling.
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