Yesterday was a day of contrasting data for the Eurozone which saw the euro hold itself below the 1.35 level against sterling. Economic sentiment hit a four year high which suggests that European businesses have become more upbeat and that the quantitative easing programme is working whereas inflation in Germany fell to 0% this month, which should add pressure on the European Central Bank (ECB) to ramp up its quantitative easing programme. The ECB targets inflation of close to under 2.0%, which is a long way off, given current levels. German Consumer Price Index (CPI) data also fell to 0.2% from last month’s figure, compared to expectations for a decline of 0.1%.
Today we expect two pieces of key data from Germany. Retail sales data, is released at 7.30am this morning, and is forecast to fall to 0.2%, in comparison to 1.4% last month. Employment data and CPI data from the Eurozone is out at 10am – as the CPI is an indicator of inflation, results could have a significant effect on euro markets.