Despite some signs of early positivity for the euro, this week has seen considerable weakening on its part against other major currencies. From Monday evening onwards, the single currency c weakened against both the US dollar and sterling, with accelerated losses on Thursday. More positive economic releases from the UK and the USA played their role in rate movements, whilst European Central Bank (ECB) President Mario Draghi’s address yesterday further contributed towards the euro slide. Draghi stated that interest rates in the Eurozone would remain at all-time lows for an extended period of time as the eighteen-nation bloc searches for a footing upon which to build a sustainable recovery. Central bank interest rates are positively correlated with currency strength.
Data from the Eurozone has been mixed this week and in any case has failed to have a significant impact on euro performance so it is unlikely that today’s German Factory Orders figures will have any great bearing on the day’s rate movements . . . unless we see figures that diverge strongly from predictions.