A quiet sort of day for the single currency yesterday saw little movement. This comes after a positive week that’s seen growth of between 0.60% and 1.60% against most currencies, with the notable exception of USD.
Inflation remains the main cause of the euro’s success. While fast rising prices are a problem for the economy and society, they do tend to support the currency because the central bank has to raise interest rates to beat them. Yesterday’s data showed inflation of 8.5%, which is a small drop from last month but still worse than expected. Core inflation, taking out food and fuel, was just 5.6%, but this was even worse than last month.
This being far above the 2% ECB target, it was no surprise to see Christine Lagarde, ECB chief, saying that a 0.5% rise in interest rates is likely later this month.
Good news so far this morning has been Germany’s trade balance, which increased to €10.8bn, and we will shortly hear a flurry of final readings for February’s PMI and GDP across Europe.
EUR/USD past year
