Like most of the other major currencies we follow closely here, the euro spent the first 12 hours of the week moving essentially sideways in relatively tight trading ranges. At the start of business in North America, however, the EUR/USD pair caught a decent bid and moved up more than half a cent from 1.2265 to a high just above 1.2325. During this move, the EUR remained steady against the GBP but fell back against the CAD, AUD and NZD.
In economic data on Monday, the headline Sentix investor sentiment index fell to 19.6 in April from 24.0 in March, below the consensus, 20.8. The Press Release noted, “The good weather period for the economy in the euro area is coming to an end. The overall index fell by 4.4 points to 19.6 index points. The third decline in a row is due to a significant deterioration in economic expectations, which fell by 5.8 points and are negative again for the first time since July 2016. The first mover among the leading indicators thus again points out an economic slowdown at a very early stage. Even though the current situation is still rated as excellent at +43 points, the prospects for the future have become massively gloomier… The customs disputes, fueled by U.S. President Donald Trump, are leaving their traces.”
Speaking to the European Parliament, the ECB’s outgoing vice president Vitor Constancio said the European Central Bank should be cautious and avoid tightening its ultra-loose monetary policy too fast. “Inflation, which is our objective, has not yet responded completely to what we wish to see. We have confidence that inflation will continue to evolve...(but) we should be cautious in order to avoid that some early, strongly restrictive policy could derail this development.” Eurozone government bond yields held near recent on concern over economic growth, as a week of hefty European sovereign debt redemptions gets under way. Germany’s 10-year government bond yield is around 0.50 percent, far below this year’s high of 0.81 percent. The EUR opens in Asia today at USD1.2320, AUD/EUR0.6245 and NZD/EUR0.5930.