What to expect for the Euro this week
The Euro had a generally disappointing week last week, despite economic data being generally quite positive and providing further hints that the Eurozone economic recovery is still on track.
After the European Central Bank meeting last week, members of the ECB showed a revision of the growth forecasts, however the inflation forecast wasn’t touched. This was the main reason for the Euro’s slump at the end of the week, as Mario Draghi, President of the European Central Bank stated that the year consumer price index or inflation reports mean that the bond buying programme or quantitative easing programme is likely to continue.
This week there isn’t much data for the Euro to get too excited about with tomorrow’s German IFO survey the most prominent release for this week.
Political update: Will Italy prove to be a thorn in the side for the Euro?
Over the weekend, Italy’s far right political group five star said that they would announce a referendum on whether the country would stay in the European Union if Brussels and Berlin fail to agree to a significant reform of the Eurozone. The European Central Bank have the difficult task of choosing a monetary policy for all 27-member states, all with differing levels of economic output. This referendum could come at some point during 2018, with the general election scheduled to take place March 4th. Five star have stormed into a 5 percent lead in the polls over the weekend. This could provide some real opportunities further down the line for clients buying Euro’s, should the party keep gaining momentum. We only have to cast our thoughts back to when Greece looked to come out of the Euro following an inability to pay back its loans, the issue in Italy looks to be repeating itself.