Although another stream of less than impressive Eurozone data heightened concerns regarding the Eurozone’s economic stability this week, the currency was able to climb close to a two-month high against the US Dollar ahead of the European Central Bank’s rate decision.
Less than impressive data to add to the tally this week included dropping confidence and business conditions, and unemployment in the Eurozone rising to a new record high of 12.1 per cent.
On Thursday the ECB acted in accordance with expectations when it cut the key benchmark rate by 0.25 per cent to a record low of 0.5 per cent.
In ECB President Mario Draghi’s accompanying statement he intimated that the central bank was willing to consider additional policy measures if the Eurozone’s recession continued to deepen.
But after Draghi hinted that the ECB could cut the deposit rate below zero the Euro fell against the majority of its currency rivals, declining by the most significant amount against the US Dollar for over two-weeks.
On Friday a governing member of the ECB council engaged in damage control, stating that the central bank had no intention to slash the deposit rate below zero at present.
The Euro consequently enjoyed a rebound, despite the EU lowering the Eurozone’s growth forecast for 2013. Instead of the 0.3 per cent contraction predicted in February the EU now expects the currency bloc’s economy to shrink by 0.4 per cent.
The growth projections for Germany were also negatively revised from growth of 0.5 per cent to expansion of 0.4 per cent.
Meanwhile, France became the seventh nation in the currency bloc to have economic contraction forecast for 2013.
As it stands, the economies of France, Cyprus, Spain, Portugal, Greece, Slovenia and the Netherlands are expected to contract.
The French economy is now expected to shrink by 0.1 per cent this year while growth in Spain and Greece is forecast to fall by 1.5 per cent and 4.2 per cent respectively, with contraction of 8.7 per cent expected for the bailed-out Cypriot economy.
Euro Exchange Rates (as of 12:00 am GMT)
< Lower than last week
> Higher than last week
The Euro is trading against the Pound in the region of 0.8436 >
The Euro is trading against the US Dollar in the region of 1.3124 >
The Euro is trading against the Australian Dollar in the region of 1.2800 >
The Euro is trading against the New Zealand Dollar in the region of 1.5433 <
The Euro is trading against the Canadian Dollar in the region of 1.3259 >