020 7898 0500German Economic Sentiment data came out well below what was expected yesterday and caused the euro to weaken against the majority of other currencies. The data, which is compiled from a survey of German analysts and institutional investors, weighed in favour of the view that the European Central Bank (ECB) will act to further reduce interest rates or inject further liquidity into the Eurozone when it meets next month. The figures showed the most pessimistic outlook from the Eurozone’s largest economy since January of last year. As a result, losses were seen against sterling, the US dollar and the majority of other major currencies. Most notably, the euro-US dollar rate dipped just below 1.37 at points in the day, reaching a 5-week low.
Today, the President of the Bundesbank (Germany’s central bank) Jens Weidmann will be speaking in Berlin and given that he is a voting member of the ECB his words are likely to give some insight into the action to be taken in June. Weidmann’s words may cause further euro weakness if they reinforce the sentiment reflected in yesterday’s release. Additionally, Industrial Production figures are due out at 10am this morning and may have some impact on the performance of the single currency throughout the day.
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