Euro hit an almost-five-month high again sterling yesterday, with the latter put under pressure from coronavirus fears. However, the eurozone is not immune to the same fears, with 16 million people under lockdown in Northern Italy, That said, euro benefits from stocks being sold off, as investors commonly borrow in the single currency to fund investments, so capital is in fact returning to the Eurozone.
This Thursday’s European Central Bank policy meeting will see Christine Lagarde’s reaction to the crisis so far. As it stands, the markets are not forecasting an emergency rate cut, like the Federal Reserve made recently. However, the bank is expected to prepare policy measures to help businesses hit by the outbreak.
The ECB’s forecasts are also expected on Thursday and will likely be revised downwards, with supplier chain disruption particularly impacting the German and Italian economies.
This morning, we will see Eurozone construction output figures and economic sentiment indices for the Eurozone and Germany.
