EUR: bad day at the office for the euro but eurozone economy continues to grow

The euro weakened against the US dollar and sterling yesterday following better-than-expected manufacturing PMI data from the UK and jobs data from the US. It has been a rough few days for the single currency, though admittedly this has had more to do with events elsewhere than anything happening to the eurozone economy.

Indeed, there has been a raft of positive data of late, with Spain’s – and the eurozone’s – GDP figures showing healthy growth. The economy is certainly recovering which is one of the key reasons the European Central Bank has decided to cut its quantitative easing programme to €30 billion a month from January 2018. However, the decision to commit to this for nine months caused the euro to dip a little and it has continued that trend since, albeit slightly.

Today we have the German unemployment data and, in truth, it is reasonable to expect some further weakening against the pound and US dollar. Again, this is because of events elsewhere and will not concern ECB President Mario Draghi too much – he is known for favouring a weak euro anyway, so he could even be rather pleased.