Over the last five days the Eurozone has published several pieces of positive economic data, including strong Germany employment and factory order figures.
Although other reports were less upbeat (with Eurozone inflation slowing and unemployment in the currency bloc holding at a record high) the Eurozone’s economic recovery appears to have progressed at the end of 2013.
Euro movement was restrained however as industry experts focused on the week’s big news event – the European Central Bank’s rate decision.
While the central bank opted to leave policy unchanged (as economists expected) by stressing that the ECB stands ready to act and that it is prepared to introduce an additional rate cut if the threat of deflation grows, President Mario Draghi lessened the appeal of the Euro.
The Euro posted modest declines against several of its most traded rivals but has since recovered losses against the Pound and US Dollar.
However, economists have estimated that the Euro could slump to 1.28 against the US Dollar before the end of the year.
As an analyst with IG Markets Securities Ltd. states; ‘It’s just a matter of time that the ECB will introduce additional monetary easing amid disinflation. I expect the Euro to be sold this year.’
Similarly, a former ECB economists was quoted as saying; ‘Certainly if we were to have an unexpected negative shock that leads to growth coming out on the weaker side or inflation failing to pick up then I think we are looking at the ECB having to adopt quantitative easing.’
Although the Euro is currently in line to post a small five-day gain of 0.2 per cent against the ‘Greenback’ the EUR/USD pairing could drop before the weekend if today’s US non-farm payrolls report comes in at or above the forecast level.
A strong employment figure would add to the case for the Federal Reserve tapering stimulus this month and give the US Dollar underlying support.
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,1.3610 ,
Euro,,British Pound,0.8267 ,
Euro,,Australian Dollar,1.5289 ,
Euro,,New Zealand Dollar,1.6519 ,
Euro,,Canadian Dollar,1.4753 ,