Over the course of European trading the Euro attempted to advance on the Pound in response to positive economic reports for the Eurozone.
While the Pound softened following the release of the UK’s consumer price index, the Euro was supported by domestic data and managed to trim recent declines.
Data compiled by Eurostat showed that the Eurozone’s trade surplus widened in February on an annual basis thanks climbing export levels and stagnating import levels.
Eurozone exports increased by 3 per cent on the year – resulting in a foreign trade surplus of 13.6 billion Dollars in February.
In January the trade surplus stood at a revised 0.8 billion Euros.
Meanwhile, Germany’s ZEW current situation survey surged from 51.3 last month to 59.5 in April. A reading of 51.4 had been expected.
But it wasn’t all good news.
The German ZEW economic sentiment survey slipped slightly from 61.5 in March to 61.2 in April while the nation’s expectations measure dropped from 46.6 to 43.2 – considerably less than the reading of 45.0 expected.
The decline in investor confidence in the Eurozone’s largest economy was the fourth consecutive monthly drop and reminds investors that German economic stability is at least partially reliant on external factors.
According to senior economist Christian Schulz; ‘The crisis in Ukraine continues to sow uncertainty. Fortunately, strong Germany is in the best position to deal with the fallout from the Ukraine crisis. That may act as a shield for the Eurozone recovery.’
Yesterday’s comments from European Central Bank President Mario Draghi regarding the possibility of a strong Euro forcing the introduction of additional stimulus also limited Euro gains.
Meanwhile, the British Consumer Price Index showed that UK inflation slowed to a four and a half year low in March, adding to the case for the Bank of England holding interest rates and triggering modest declines in the Pound.
Tomorrow’s Eurozone inflation reports are bound to have a notable impact on the Euro exchange rate.
The final data are expected to show that the Eurozone’s CPI advanced by 1.0 per cent in March month-on-month following a gain of 0.3 per cent in February. On the year the consumer price index is projected to show an increase of 0.5 per cent, with core CPI coming in at 0.8 per cent.
The Euro to Pound (EUR/GBP) exchange rate is also likely to be affected by UK employment data while, US manufacturing production figures could drive EUR/USD movement.
Investors interested in the EUR/CAD exchange rate meanwhile will be focusing on the Bank of Canada’s rate decision, taking place at 15:00 GMT on Wednesday.
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,1.3807 ,
Euro,,British Pound,0.8255 ,
Euro,,Australian Dollar,1.4708,
Euro,,New Zealand Dollar,1.5978,
Euro,,Canadian Dollar,1.5173,
[/table]
