The Euro climbed to its highest level in nearly a month against the Pound and could push higher as data released in Germany added to signs that the Eurozone’s largest economy is continuing to show positive growth.
A report showed that industrial production in Germany expanded by 0.8% month-on-month, beating economist forecasts for a rise of 0.7%.
The big supporter of the single currency however was yesterday’s decision by the European Central Bank to maintain interest rates and not introduce new monetary stimulus measures. The currency was buoyed by comments made by ECB President Mario Draghi who said that inflation in the region is expected to see a gradual rise. His comments dampened speculation that policy makers will introduce measures to tackle the threat of deflation.
“A large part of the market was expecting some form of action from the ECB, or some indication that monetary easing would be coming in the very near future. We didn’t get either of those things, which is why the Euro is trading higher across the board,” said an economist.
Draghi also reiterated the ECB’s forward guidance on rates, saying that interest rates will remain at their present levels, or lower for an extended period. The ECB remains determined to maintain the high degree of accommodative monetary policy for as long as needed, and will take further actions as it sees fit, he added.
The Bank also upwardly revised its growth forecasts for the Eurozone economy. It now expects to see growth of 1.2%, instead of its previous guess of 1.1%.
Economists will now be focused on this afternoons US jobs report. If the report comes in below forecasts we can expect the Euro to push higher.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3886 ,
Euro,,British Pound,0.8292 ,
Euro,, Australian Dollar,1.5211 ,
Euro,,Canadian Dollar,1.5254 ,