Euro undermined by poor data and negative sentiment

The euro started the week in a relatively quiet fashion, strengthening slightly against the US dollar and sterling as we saw positive economic sentiment data coming from Germany and reasonable rise in confidence in the Eurozone as a whole. The largest movements were on Wednesday as the single currency depreciated sharply against the majority of its major trading partners. Euro weakness came as a result of a market rumour suggesting that the European Central Bank (ECB) is actually considering implementing a negative overnight deposit rate. Movements on Wednesday wiped out most of the gains that the seventeen-nation currency had made against sterling and the US dollar over the previous five days or so. Despite a host of key economic data being released yesterday and addresses from ECB president Mario Draghi and the President of the German Central Bank there was relatively little volatility seen in euro crosses. German Manufacturing data came through largely as expected showing moderate growth, whilst French data from the sector showed contraction. Looking ahead to today, expect German Business Climate data to have an impact on the day’s movements, whilst Draghi’s second speech may have a greater impact than the first. Call your trader now for guidance on managing your exposure for the weeks ahead.