European Central Bank President Mario Draghi is set to speak on Saturday, and while the markets will be shut during the event, its impact on the value of the Euro will likely spillover into the beginning of next week. Here’s what you need to know.
First, lets take a look at the week so far. The Euro has had a mixed week against the majors, falling versus the Australian dollar, the UK sterling and the Japanese yen, while gaining against the US dollar. The mixed activity comes off the back of equally mixed fundamental data, with the headline releases being German production data, reported at 0.4% versus a forecast at 0.3%; German trade balance, reported at 15.7B versus a forecast of 17.8B; and German CPI (Y0Y), reported as expected at 1.0%. In addition, the ECB released its monthly bulletin, which reiterated the central bank’s desire to keep interest rates low to aid economic recovery.
Draghi will address the monthly bulletin at his Washington DC speech tomorrow, and traders will expect him to strengthen this expressed desire with a considerably dovish tone. Fed Chair Janet Yellen dampened expectations of a near term interest rate hike in the US with the FOMC meeting minutes release on Wednesday, so the EURUSD could be in for a drawn out period of consolidation next week.
Fundamental releases to keep an eye on out of Europe include Monday’s Eurozone industrial production (MoM) release, forecast at 0.2%; Tuesday’s German ZEW current conditions and economic sentiment surveys, forecast at 51.8 and 45.0 respectively; Wednesday’s Eurozone CPI (YoY), forecast at 0.5%; and Thursday’s German PPI, forecast at 0.1%.
Misses across any of these releases could put downside fundamental pressure on the Euro, and could result in a continuation of the general downtrend across the majority of its majors and crosses.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com