The Euro started the week on the back foot as investors prepare themselves for tomorrow’s ECB Central Bank Communications Conference in Frankfurt, where central bankers such as Mark Carney, Janet Yellen and Mario Draghi discuss the global economy. What is maybe of more interest will be that this conference in Frankfurt holds as much importance as the last forum held in Sintra, Portugal. During that meeting Mario Draghi’s hardened stance led the Euro to rally to multi-month highs against the US Dollar and Pound. The reason for this was the announcement that the Eurozone economy was strong enough to support a softening of the monetary policy. At present, we have now seen that Mario Draghi has had to be cautious in his approach in order to stop the Euro rallying again, which would be a unwanted issue for Eurozone exporters.
Economic data due out tomorrow
On top of these speeches, a host of economic data is also due out tomorrow. Firstly, the ZEW economic survey for Germany, and inflation data is released tomorrow. As Germany is the strongest economy in the Eurozone any improvement in economic data is normally considered a positive for the Euro.
Following the German data releases we have Consumer Price Index (CPI) data for Spain and Italy and then Gross Domestic Product (GDP) data and economic sentiment reports for the Eurozone as a whole. This EU data could have a substantial effect on the approach that Mario Draghi takes in his speech later that day. I personally wouldn’t be surprised to see the Euro strengthen tomorrow as a result of positive data releases.
In a report by Reuters today, the Eurozone is now considered by many investors as being out of the doom and gloom period and could be set for a period of sustained economic growth. It will be interesting to see if tomorrow’s data and Mr Draghi’s tone match up to this.