An unremarkable start to the week for the euro yesterday saw it hold flat around 1.27 against the US dollar on Monday and Tuesday, but make up some ground against a relatively weak sterling. Wednesday was an interesting day, with the euro showing resilience to a combination of factors that we would normally expect to weigh significantly on the single currency. Industrial production growth figures for the region showed a contraction, coming in at -1.8% which was below forecast and almost 3% down on the previous month’s release. This was followed by German economic sentiment data which, following a run of worrying data from the Eurozone’s talismanic economy, was not expected to come in anywhere near last month’s result of 6.9 (anything above 0.0 illustrates positive sentiment). However, few had forecast it to come in as low as it did at a worrying -3.6.
Thursday was a relatively quiet day for the Eurozone data-wise, but it saw the single currency lose some of the strength it gained on Wednesday. Final inflation figures out in the morning saw an expected 0.3% rise with a better-than-expected trade balance. The spotlight is still on how the European Union (EU) will recover from their latest setback, with the EU’s powerhouse Germany, along with France and Italy suffering from recent poor data releases. With Interest rate hikes out of the question and the sign-off for their asset purchasing programme imminent, focus will be on how the Eurozone will recover in the final quarter of 2014 and moving into 2015.