After a strong day on Tuesday which saw some significant recovery from a waning euro, yesterday saw the single currency give back much of the gains achieved. A poor morning session against the US dollar was succeeded by an equally poor afternoon session against the sterling. There wasn’t an obvious cause for the drop-off, as the morning’s Purchasing Managers’ Index (PMI) figures for the bloc were released in-line with forecast. Retail sales in the afternoon did fall behind forecast, but the most likely cause of the weakness would be that the euro had over reacted following rumours from the central bank.
It promises to be an interesting day for the euro starting with German factory orders data which will be followed by 10-year bond auctions from France and Spain. The main event of the day though will be the European Central Bank press conference and the announcement on interest rates and financial support to the Eurozone. It is unlikely we will see a deviation from the current 0.05% rate, so the main focus will be looking for clues towards on future monetary policy decisions.