Today appears to be the calm before the storm for the Euro as tomorrow a flurry of speeches and data could cause significant market volatility. The latest Gross Domestic Product (GDP) data for the Euro will be released tomorrow with an expectation that the year on year figure will increase slightly. Furthermore the latest Industrial Production data for December will be released which is expected to show a major year on year increase of 1.0%.

The European Central Bank (ECB) have commented of late with regards to the importance for good economic data in order to encourage a change to monetary policy. Therefore the markets could majorly swing depending on the release with consideration to what the bank may decide to do next.

ECB Members Speeches

Wednesday and Thursday will see speeches from ECB members. Yves Mersch will start things off on Wednesday followed by speeches from Peter Praet and Sabine Lautenshclager on Thursday. Previously members of the central bank have been cautious with regards to their comments as they don’t want to spook the markets into unwanted volatility. Any indications from a member of a central bank could provide insight into the ECB’s thoughts, which in turn could affect the Euro’s value.

The Euro has regained the lost ground against Sterling in the last few weeks when the market climbed up to 1.15. However there has been a return to the 1.12’s and we have also seen the strength against the US Dollar continue.

The European Central Bank are unlikely to raise interest rates from the current 0% this year unless the Eurozone inflation levels increase significantly. The good economic performance over the last year and the positive business and consumer sentiment will at some point need to result in wage growth and inflation. Until the European Central Bank believe that point has been reached there is unlikely to be any changes, just merely speculation.