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Weekly Roundup: Easing Eurozone inflation dampens demand for euro

currency-newsWeekly Roundup: Easing Eurozone inflation dampens demand for euro
In a fresh blow for the euro November’s Eurozone consumer price index slowed from 2.2% to 2.0%, falling back in line with the European Central Bank’s (ECB) inflation target.

This easing in inflationary pressure gives ECB policymakers less incentive to consider raising interest rates from their current lows, keeping the central bank in a state of looser monetary policy.

Although the ECB is still expected to wind down its quantitative easing programme before the end of the year this left the euro on the back foot against many of its rivals.

Investors were also spooked by news that the Italian economy had unexpectedly contracted in the third quarter, raising fresh doubts over the viability of the government’s controversial 2019 budget proposal.

November’s finalised Eurozone manufacturing and services PMIs are not expected to offer the euro much in the way of support, with the data set to confirm the economy’s weaker performance.

Any uptick in Eurozone retail sales after September’s stagnation could offer a rallying point to the single currency, even though stronger domestic demand would not make up for weaker exports.

Comments from ECB President Mario Draghi may also weigh on EUR exchange rates this week, unless he adopts a more optimistic outlook on monetary policy.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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