It was a troubled start to the week for the euro, with uncertainty surrounding Greece’s future in the European bloc as the upcoming election could result in a win for an anti-austerity party Syriza, This could put the country in danger of reneging on the terms of its European Central Bank (ECB) bailout and exit the Eurozone. The uncertainty is weighing heavy on the euro, prompting it to drop below the psychological level of 1.20 against the US dollar – coming very close to nine year lows. The situation was worsened by poor German inflation and Spanish employment figures. Despite the euro’s woes, only a small amount of ground was lost against sterling, with the pound also having a difficult day.
Looking forward to today, we have services industry data from across the Eurozone. Tomorrow we will have inflation data for the whole of the Eurozone with the worry being that inflation will have become deflation given the fall in energy costs. As mentioned yesterday, a busy week for data and no respite in sight for the euro.