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Weekly roundup: Euro rocked by dovish ECB

currency-newsWeekly roundup: Euro rocked by dovish ECB
The euro initially weakened last week, with the single currency being undermined by some dovish comments from European Central Bank (ECB) President Christine Lagarde.

Lagarde suggested that the ECB’s forward guidance following its July policy meeting is likely to change to reflect its recent changes to its inflation target, also hinting that the bank could potentially extend its bond buying programme into 2022 as part of this.

The euro’s strong negative correlation with the US dollar then infused some notable volatility into EUR exchange rates in mid-week trade amidst a sharp spike and subsequent pullback in the US currency.

The euro was then mostly able to stabilise through the latter half of the week, with the single currency unable to find any strong directional bias following the confirmation that inflation in the Eurozone slowed last month.

Looking ahead it's clear that the primary focus for EUR investors this week will be the ECB’s latest rate decision.

Lagarde has indicated we could see some changes to the bank’s forward guidance when it concludes this month’s policy meeting on Thursday, which could infuse some volatility into the euro later this week.
 
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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