From a low point last Tuesday of 1.1561, the EUR climbed slowly but steadily to a high of USD1.1666 before ending week at 1.1662. Against the British Pound, the volatility of the cable rate set the tone for GBP/EUR which swung between 1.1250 and 1.1367 to end on Friday in New York around 1.1306.
This morning the softness of GBP/USD is again weighing on the GBP/EUR cross which opens in London around 1.1265. For the week ahead, Eurozone CPI on Thursday will likely be the most important of the economic numbers to be released.
With Continental Europe now enjoying its 17th consecutive quarter of GDP growth, subdued price prices are the only reason the ECB continues its policy of Quantitative Easing; albeit now at a somewhat slower monthly pace.
Provisional estimates for October showed prices rose just 0.1% on the month for a 1.4% annual inflation rate though with oil prices rising and already feeding into higher pump prices for petrol and diesel, it may not be long before CPI resumes its upward path.
As we keep saying, these are the key driver (pun very much intended!) of inflation right across the G20 and the Emerging Markets universe, though the EUR exchange rate this week is more likely to be driven by sentiment towards the US Dollar. The overnight range in Sydney has been 1.1647-1.1662 and we’d look for a 1.16 big figure throughout the London morning session.