A difficult day for the euro yesterday saw it trek back to two-year lows against the US dollar, and to month-long lows against sterling. Early in the morning saw the release of Purchasing Managers’ Index (PMI) data from the services industry, which, coming in below forecast, was enough to undermine the single currency ahead of today’s speech by Mario Draghi, President of the European Central Bank (ECB) following their monthly meeting. Monthly retail sales figures were also short of expectations, and the currency’s poor performance was exacerbated by both the US dollar and sterling having particularly strong days.
Today again promises to be an interesting one for the euro. Draghi’s speech will be closely scrutinised by traders as they look for clues regarding any further stimulus measures. With inflation levels waning, and the prospect of Eurozone-wide deflation becoming a real possibility, pressure is mounting on ECB policy-makers to adopt more substantial quantitative easing (QE) strategies. Yesterday’s PMI data did nothing to alleviate the situation – as such Draghi’s speech promises to be an interesting one.