The euro experienced some sporadic rate movements yesterday as markets seemed a little twitchy ahead of today’s European Central Bank (ECB) Interest Rate decision and subsequent press conference. Rate movements were seen against sterling and the US dollar, although overall movements – which were largely negative – were relatively limited. Weakening in the single currency yesterday was partially attributed to the poor Factory Orders and Industrial Production figures from France and Germany. Production in both economies was down on the previous month, at odds with major forecasts, which had predicted a slight increase in both economies.
Today is expected to be the most volatile day of the week for single currency as we await the aforementioned ECB Interest Rate decision and the following press conference. Investors will be interested to see how ECB President Mario Draghi’s stance has changed as the euro-US dollar rate approaches the 1.40 benchmark and a stronger euro continues to hold inflation down but inhibit long-term recovery in the Eurozone. The tone of Draghi’s rhetoric and any mention of asset-purchases or changes in Central Bank interest rates are likely to cause sharp changes in euro rates.