The EUR begins this Monday morning after a mixed week in which it fell against a quite buoyant US Dollar but rose against all the other major currencies to take silver medal spot on the league table. It opened on Monday around 1.2330 and reached a high on Tuesday just above 1.2410; its first time back on a 1.24 ‘big figure’ since March 28th. It slipped on Wednesday after lower CPI figures, fell further after the Fed Beige Book then tumbled on Friday after comments from ECB President Draghi sent EUR/USD down to a low of 1.2265; its weakest since Monday April 9th. Overnight in Asia, the EUR has failed to bounce in any meaningful way and from a technical perspective, a break through last week’s low would open up a potential move down to 1.2225.
On Friday afternoon, President Mario Draghi acknowledged the Eurozone slowdown in a statement at the International Monetary Fund meetings in Washington, but maintained his optimism that the expansion will continue. “Notwithstanding the latest economic indicators, which suggest that the growth cycle may have peaked, the growth momentum is expected to continue.” A Bloomberg story citing anonymous ECB officials said, “European Central Bank policy makers see scope to wait until their July meeting to announce how they’ll end their bond-buying program, according to euro-area officials familiar with the matter… Governing Council members want sufficient time to judge if the economy is overcoming its first-quarter slowdown, the officials said, asking not to be identified because the internal deliberations are confidential. That could mean the June meeting, which would have the advantage of linking the decision to updated economic forecasts, might be too soon.”
There is an ECB Council meeting on Thursday this week, which explains why the officials quoted on Friday were ‘off the record’; a policy which does the ECB no credit at all in terms of openness and transparency. Mr Draghi’s comments were limited to the economy and made no mention of monetary policy so technically were within the letter, if not the spirit of established protocols on communication. Ahead of Thursday’s meeting, even more attention than usual will be placed on today’s ‘flash estimates’ of Eurozone PMI and Tuesday’s German ifo business climate index. The EUR opens in London this morning at USD1.2275 with GBP/EUR in the low-1.14’s.