The euro fared poorly yesterday as another spate of rate movements were largely attributed to speculation amongst traders and investors. The only data of note to be released from the eighteen-nation bloc was the German Producer Price Index, which came out very marginally lower than expected and had a limited effect on the currency. Since the last meeting of the European Central Bank (ECB), market speculation and interpretation of President Mario Draghi’s words have exacerbated movements in euro rates. The prominent role that such uncertainty has played of late has led to reports that the ECB is considering lengthening the time between each interest rate decision (currently one month) in order to increase transparency and reduce speculation in the interim. Unnamed sources have suggested that Draghi is considering a six-week interim between ECB rate decisions to allow time for the considered publication of minutes, as is the system in the US. Such a move may reduce the influence of market chatter surrounding ECB monetary policy.
This morning we await Eurozone Current Account figures, which detail the difference in the value between imported and exported goods and services. A greater surplus is positively correlated with the strength of the euro, therefore results that vary notably from expectations have the potential to cause movements in euro rates. More influential data is expected later in the week in the form of Manufacturing and Consumer Sentiment data.
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