Currency Note Euro

Eurozone inflation data the key release for today

By Ricky Bean September 30th, 2014

Monthly inflation data out of Germany, Europe’s most influential economy, gave some respite to the euro yesterday. The figures came in at a flat 0%, marginally better than the -0.1% that most forecasters were predicting. European Central Bank (ECB) President Mario Draghi had stressed the importance of avoiding negative inflation rates for the Eurozone, so the figures provided a glimmer of hope. This morning’s year-on-year figures for the whole bloc will also be watched closely in the market.

We may see the euro relatively range-bound over the next few days ahead of Thursday’s ECB press conference, as traders will be looking for clues as to Draghi’s medium-term strategy. He has made no secret over the last few conferences that he welcomes a weaker currency for the bloc, seeing it as a way of turning around its ailing economies by reducing the relative cost of exports. However, given that the euro has fallen by nearly 10% against its two most-traded peers, the US dollar and the British pound, Draghi will be forced at some point to accept that enough is enough in order to avoid a euro in free-fall. Other data to keep an eye on are German retail sales, as well as monthly unemployment figures for the whole bloc.