020 7898 0500The euro started the week by weakening against the majority of major currencies, most notably a resurgent sterling. The situation in Ukraine has been dominating news headlines this week and the effects of this on the single currency have been negative, if somewhat limited so far. European Central Bank (ECB) President Mario Draghi sought to prevent the euro from strengthening further against the US dollar, stating that he would increase monetary stimulus should we see continued euro strength. Draghi’s guidance quelled the strengthening of the euro in the short-term, however it is likely to take more than mere posturing to have considerable impact on the euro’s fortunes. The middle of the week has been quieter for the euro and in general we have seen less in the way of rate movements, although notably the euro did continue to weaken against sterling following Wednesday’s UK employment figures.
This morning we await the release of German Producer Price Index (PPI) data. PPI data is a key inflation indicator and can have a sharp effect on rates given the Eurozone’s exceptionally low rates of inflation at present. Tomorrow, of course, is a bank holiday in the UK, Germany and a number of other Eurozone states.
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