The single currency lost out against most major currencies yesterday following “marginally doveish” comments from the ECB president Christine Lagarde yesterday, even after they raised interest rates to their highest level in Europe for 22 years.
Before that, Spanish unemployment was revealed to have fallen to its lowest level since 2008, with 365,000 people finding jobs.
This morning we have had encouraging news on the eurozone’s economy, with France’s GDP leaping ahead by 0.5% in the second quarter of the year while its inflation rate fell to an annualised 4.3%. On the hand, Spain’s inflation rate rose, and its core inflation is still at a worrying 6.2%.
Germany’s economy has just been shown to still be slow, with Q2 GDP flatlining when there had been expectations of modest growth. Their inflation data will be released later today.
Back to yesterday’s interest rate decision, while in their comments the ECB committed yesterday to a “data-dependent approach” to future rate decisions and returning inflation to its 2% target, president Christine Lagarde raised the possibility of a pause in interest rates next month: “There is the possibility of a hike [next time]. There is the possibility of a pause. It’s a decisive maybe.” This sent the single currency into a tailspin against the US dollar, losing over 1%.
EUR/USD past year
