Weekly Roundup: Euro slumps as CPI cools more than expected

Comments from European Central Bank President Christine Lagarde dented the euro at the start of last week’s session, as she warned of weakness in the Eurozone economy.

Upbeat German consumer confidence data lent EUR some support on Tuesday, though a risk-on mood capped the safer single currency’s gains.

The euro then faced heavier selling pressure later in the week as first the German then the Eurozone consumer price indexes showed cooler-than-forecast inflation, stoking speculation that the ECB may begin cutting interest rates in the spring.

This weighed on the common currency through to the end of the week, with EUR ending lower against most major peers.

Looking forward, mixed German industrial data could prompt uncertain trade in the euro this week. Economists expect German factory orders to have stalled in October and industrial production to have recovered.

Meanwhile, an expected rebound in Eurozone retail sales could lend EUR support.