The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
EUR exchange rates then continued to fluctuate through the first half of the week after an upbeat Eurozone industrial production report was offset by the Ifo institute as it slashed its German growth forecast for 2022.
The euro then fared better in mid-week trade following a pullback in the US dollar, although its gains were capped as EUR investors were reluctant to make any aggressive bets ahead of the European Central Bank’s (ECB) latest interest rate decision.
Despite the ECB striking a broadly dovish tone -with ECB President Christine Lagarde still maintaining her stance that the recent spike in inflation is ‘transitory’, whilst also announcing plans to temporarily increase its asset purchases to cushion the end of its pandemic emergency purchase programme (PEPP) in March- the euro firmed on Thursday.
These gains were quick to fade however, with EUR exchange rates softening again at the end of the week after Germany’s Ifo business climate indicator reported business morale fell for a sixth consecutive month in December.
Looking ahead, a sparse EUR data calendar will likely see the direction of the euro driven primarily by European Covid developments this week.
This may result in some headwinds for the single currency if surging case numbers forces more countries to tighten restrictions.
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)