After reaching a significant high against the dollar, the euro weakened slightly yesterday but remains around the same levels against the pound.
The ECB’s Chief Economist, Philip Lane, said that exchange rate “does matter” when it comes to monetary policy, confirming that the ECB is uncomfortable with the rising euro. A rising euro tends to raise the international cost of goods and services produced in the Eurozone.
German and Eurozone PMI figures for August came in this morning. Both Services and Composite PMI (which combines both manufacturing and services) for Germany came in above expectations, but slightly lower than July’s reading. It was the same story for the Eurozone as a whole, with both readings beating expectations but coming in lower than last month.
