020 7898 0500It’s been a mixed week for the single currency so far. On Monday we saw the currency pushing higher as German business sentiment climbed to the strongest level since July 2011. The Ifo Institute’s business climate index rose to 112.3 in March from a revised 111.1 for February.
The single currency suffered from the UK triggering Article 50 and reports that the markets may have misinterpreted the tone of recent European Central Bank communications. It was thought that the change in the ECB’s tone suggested that we were about to see a change in monetary policy due to increasing inflation. However, an unnamed source told Reuters that policy-makers were not too worried about inflation.
Yesterday German and Spanish inflation not just missed expectations but the figures were also down from the previous month.
Today we have some key economic readings from the region. German retail sales and unemployment figures will be released alongside Eurozone inflation. The inflation figures are key. There will be a lot of focus on whether inflation can hold or post above the ECB’s 2% target. If this happens we could see rate hike discussion being reignited.
