Last week’s European Central Bank policy meeting is still weighing on the Euro and speculation surrounding the central bank’s next move may well keep the common currency under pressure for the foreseeable future.
On Thursday ECB President Mario Draghi intimated that the central bank is attempting to counter inflation risks with a quantitative easing programme involving the deployment of bond purchases worth in the region of 1 trillion Euros.
Specific details have yet to be outlined and an executive board member of the ECB was quoted as saying that there will likely be a notable delay before any action is taken.
Despite this, the prospect of additional easing has had a bit of an impact on the currency market and the Euro softened against two of its major rivals (the Pound and US Dollar) last week.
According to industry expert Erik Nielsen; ‘All of this talk about QE has gotten markets rather excited. I am sure the ECB – like most of us – is happy about this, but action is not imminent. What happens when markets realise that this was all just a semi-public discussion of the toolbox – and not what will happen, unless we get an emergency?’
Although Friday’s US non-farm payrolls figure failed to meet expectations, the Euro began European trading in a softer position against the US Dollar having retained last week’s declines.
While the US Dollar spent Monday holding fairly steady as investors looked ahead to the publication of minutes from the latest Federal Open Market Committee policy meeting, the Euro was able to strengthen in response to fairly positive economic data for the Eurozone.
German industrial production increased by slightly more than forecast last month (advancing by 0.4 per cent) while the Eurozone Sentix investor confidence measure for April came in at 14.1, up from 13.9 the previous month.
Before the close of North American trading additional Euro to USD movement may occur in response to US consumer credit figures.
Over the next few days reports to look out for include German trade figures, the release of FOMC minutes, the publication of the ECB monthly report, the US monthly budget statement, German inflation figures and the University of Michigan confidence index.
Unless the ECB minutes throw more light on the QE situation the Euro/US Dollar pairing may trade in a fairly narrow range for the first half of the week.
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,1.3732,
Euro,,British Pound,0.8276,
Euro,,Australian Dollar,1.4818,
Euro,,New Zealand Dollar,1.5992,
Euro,,Canadian Dollar,1.5102,
[/table]
