It’s was a downbeat end to what had been a generally positive week for the euro up until Friday. Early Friday morning saw Mario Draghi, President of the European Central Bank (ECB), addressed an audience at the European Banking Congress in Frankfurt. In the speech Draghi focused on the bloc’s waning inflation levels, and stated that he and the other policy makers would be forced to broaden asset purchasing should the current levels worsen. An increase of asset purchases injects liquidity into the market, and hence devalues a currency. As a result, any decision to hike stimulus measures would trigger a euro sell-off.
Looking forward to this week, there are one or two events to keep an eye on. This morning we have German business climate figures, forecast to be slightly down on last month’s release. Later this week we have a raft of inflation data from across the Eurozone, as well as German unemployment data on Wednesday.
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