It was another difficult day for the euro, with a handful of data releases providing further evidence of the bloc’s worsening economic conditions. German retail sales figures came in above forecast, but these coincided with significantly worse-than-forecast unemployment figures. Later yesterday morning we had the consumer price inflation figures for the entire Eurozone which came in at 0.3%, which was as forecast but worryingly low. As a result, the euro fell to two-year lows against the US dollar, and came very close to six-year lows against sterling.
The European Central Bank meets tomorrow, with many forecasters predicting a move towards more aggressive stimulus measures, which will likely further push down the euro’s value. The outlook appears increasingly bleak. Italian and Spanish manufacturing industry figures this morning will be unlikely to carry to much sway on the market as traders keep one eye on tomorrow’s meeting, but should the figures diverge from forecasted then we may see some movement.