Over the course of European trading the Euro softened against the majority of its most traded currency counterparts.
Although the US Dollar was faltering ahead of the release of tomorrow’s US retail sales report, the common currency lost ground against its North American rival as industrial production in the Eurozone was shown to have fallen by considerably more than expected.
In December industrial production in the currency bloc declined by 0.7 per cent, month-on-month, following a negatively revised gain of 1.6 per cent in November.
Economists had forecast a monthly dip of 0.3 per cent.
On the year industrial production was 0.5 per cent higher, notably less than the 1.8 per cent annual gain expected.
The appeal of the Euro fell further as European Central Bank policy maker was quoted as saying that the central bank is ‘seriously’ considering introducing negative deposit rates.
The report prompted forex strategist Manuel Oliveri to observe: “Such comments make clear that additional policy action is being considered as monetary conditions have been tightening. They strongly cap ECB monetary policy expectations and that comes to the detriment of the Euro. We expect the Euro to trend lower over the coming few weeks as we also think that the ECB should do more.”
As well as shedding 0.5 per cent against the US Dollar the Euro dropped by the most for three weeks against the Pound as the British currency broadly strengthened in response to the Bank of England’s inflation report.
Declines against the US Dollar weren’t impeded by the news that US mortgage applications were shown to have fallen by 2.0 per cent after a previous 0.4 per cent gain.
Additional Euro movement is likely to occur tomorrow in response to the publication of the German consumer price index and the ECB’s monthly report. If that report also alludes to the potential introduction of negative rates the Euro may well fall further as the week continues.
Tomorrow’s advance US retail sales figures and initial jobless claims data will also impact the EUR/USD pairing.
Sales in the world’s largest economy are forecast to have stagnated in January.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,British Pound,0.8215 ,
Euro,,New Zealand Dollar,1.6329,