Last week, we saw the euro make substantial gains across the board as the market shrugged off the cautious tone from ECB President Mario Draghi. He stated that a ‘substantial degree of accommodation is still required’ and that ‘underlying inflation is yet to show convincing signs of a pick-up’.
On Friday, we saw the EUR hit its highest level since August 2015 against the USD. This came on the back of comments from unconfirmed sources that the October meeting is going to the likeliest time for the ECB to start discussing tapering.
Looking to the week ahead, it is busy and data-heavy. Starting with today, we have the first reading of the purchasing managers’ index for both the manufacturing and service sectors. This figure has two readings and it is normally the first reading that is the most volatile.
On Tuesday, the German IFO data will be under the spotlight. This is a highly respected index because of its large sample size and historic correlation with the German economy, as well as the fact it takes a view on the six-month outlook.
On Friday, we have the inflation readings from Spain and Germany which will give an indication of the pending Eurozone figure.