How Will the ECB’s Rate Decision and PMI Data Affect the Euro This Week?

Pound to Euro: When Will Sterling Fall?

The Euro kicked off last week worse for wear as it lost ground to most major currency rivals. This came after an improvement in investor appetite for riskier assets and the US-EU trade tensions came back into the market’s spotlight. Throughout the week, the highlights for the Euro will certainly be the economic data releases and the European Central Bank’s (ECB) decision on their interest rate policies. The combination of the two will be the main drivers of price action for the EUR this week.

ECB Decision Predicted to Remain Unchanged, but the Press Conference Is Set to Be Scrutinised for Clues on Euro Outlook

The ECB’s rate decision will arrive on Thursday at 12:45. Predictions flocking in are in favour of the interest rates and policy initiatives to remain unchanged, but it is expected that the market will still scrutinise the details of the ECB’s statement and the entire press conference closely for clues on the EUR outlook.

Eurozone PMI Surveys Could Give Investors Insight to EUR Outlook

Despite boosted optimism, it is unlikely that this week’s briefing will provide total clarity on the outlook as the strategic review of the bank’s current policy stance is set to take months. Therefore, investors may turn their attention to Friday’s PMI surveys for an insight into the Euro outlook through its performance in its domestic data. December’s HIS PMI number were revised higher for the Eurozone’s manufacturing and services sectors earlier this month, but the manufacturing sector still finds itself in contraction, like many other counterparts in the developed world. The revision did boost the Euro, but this also means that Friday’s data will be closely eyed by the market for any shake-ups. Any disappointments would unsettle the Euro whilst any shock surprises could see the single currency rally.

Investors are hoping to see the manufacturing PMI rise from 46.3 to 46.9 while the services PMI is seen rising from 52.8 to 52.9. It is likely that the manufacturing PMI for Germany will be the draw of attention for the whole of the Eurozone, which has been seen rising from 43.7 to 44.6. the German figures will be released at 08:30 on Friday while the Eurozone numbers will be released a little later at 10:00 the same day. The market eagerly awaits the numbers as they will give an indication of EA growth momentum for Q1 in 2020.

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