Weekly Roundup: Euro slips following dovish ECB comments

The euro faced a choppy start to the week following mixed trade data from Germany.

Dovish comments from European Central Bank rate-setter Isabel Schnabel then dragged EUR lower, as the hawkish policymaker said another hike was ‘unlikely’.

Weak German industrial data then weighed on the common currency moving forward. German factory orders unexpectedly plunged in October, printing at -3.7%, while industrial production also suffered a shock contraction.

EUR ended the week unable to regain ground after the final German consumer price index confirmed a sharp slowdown in inflation last month.

The focus for the week ahead is undoubtedly the ECB’s interest rate decision. Any indication that the bank may soon consider cutting rates could weigh heavily on the single currency.

Following the decision, the flash PMI results for December could dent EUR. Economists expect private sector activity to have contracted for a seventh consecutive month.

In the meantime, Germany’s economic sentiment index could also create headwinds for the euro. Morale in the Eurozone’s largest economy is expected to have edged lower in December, snapping a four-month winning streak.