Yesterday was a much more volatile day across the currency markets and the euro weakened sharply across a number of major pairings. Industrial Production in the Eurozone fell at a greater rate than expected during the last month of 2013, with yesterday’s figures revealing a fall in output of 0.7%. This, along with reports from a board member of the European Central Bank (ECB) that the ECB are seriously considering negative interest rates, caused the single currency to weaken sharply against the US dollar. Euro depreciation against sterling was more pronounced as the influences above in conjunction with the effect of the Bank of England Inflation Report caused a considerable shift. ECB Presidents Mario Draghi speech in Brussels had a muted effect and indeed did little to reverse euro fortunes, especially as there was no denial of that the ECB is contemplating implementing further monetary stimulus in order to avoid deflation.
Investor focus will now be on the next monthly ECB meeting in March, where Draghi may decide to make interest rate changes and alter forward guidance. Today the ECB will release its monthly bulletin revealing the data considered when making last month’s interest rate decision. This has a potential to affect the eighteen-nation currency in the short term.
Wondering how this affects currency markets and whether to buy or sell euros? Call your trader now for live rates and guidance.