Weekly Roundup: Euro wavers amid poor data and hawkish ECB

Tom Brown May 22nd 2023 - < 1 minute read

A larger-than-forecast contraction in Eurozone industrial production put EUR on the back foot at the start of last week’s session. Output slumped by 4.1% in March.

The safer euro was able to hold its ground against its riskier peers on Tuesday, although a notable fall in German economic sentiment saw the single currency give ground elsewhere.

Softer-than-forecast Eurozone inflation on Wednesday saw EUR slip. While the annual inflation rate printed in line with preliminary estimates, a slight downward revision to month-on-month inflation dented European Central Bank (ECB) interest rate rise bets.

After muted movement on Thursday, due to an EU public holiday, the common currency found support on Friday. Hawkish remarks from two ECB officials lifted the euro, while the currency also benefitted from its negative correlation with a weaker US dollar.

This week, the Eurozone’s PMI survey results could impact EUR. Could signs of a weakening private sector weigh on the euro?

Investors will also be closely watching new data from Germany, amid fears of a coming recession in the Eurozone’s largest economy. If the latest business and consumer confidence scores show cause for concern, the euro could slide.

Written by
Tom Brown

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