An uneventful morning session for the euro saw it hold firm, with disappointing Spanish employment data released early in the day having a surprisingly muted impact on the markets. The afternoon was a different story, as the single currency gaining as much as 1.5% up on some peers, and over 0.5% on both the US dollar and the British pound. Over recent months there has been a lot of speculation regarding when and by how much the European Central Bank (ECB) will increase monetary stimulus ñ a decision that would weigh heavy on the euro. Yesterday afternoon rumours were dampened, however, by the announcement that central bankers are due to challenge ECB President Mario Draghi on his secretive leadership style, with particular reference to how he has kept aides in the dark regarding policy decisions.
Markets have responded with the opinion that this will make it more difficult for Draghi to make any bold decisions in the short-term, and hence reduce the likelihood of a ramping-up of stimulus measures. How Draghi responds to the accusations promises to be interesting.
Looking forward and off the back of Monday’s Manufacturing Purchasing Managers’ Index (PMI) data, today we have Services PMI data from across the Eurozone. With the Services sector making up around two thirds of EU economic output, today’s figures will hold more sway than Monday’s, and as such markets will be watching closely.