- Euro Opens Week on Back-Foot as UK Negotiations Get Underway
- Wednesday Saw UPS and Downs for the Eurozone as Lagarde Reassures the Market
- Poor German Data Undermines Lagarde’s Optimism
This week has been volatile for the euro, with many of its competitors performing well at different stages in the week. The euro opened the trading week on the back foot after a disappointing week of economic figures. This week also highlighted the start of the EU-UK trade negotiations which is expected to be a long process with many twists and turns on the path to a deal. Wednesday saw the release of the Eurozone’s Markit services PMI and Composite PMIs for January. Both figures impressed and leant support to the euro. However, retail sales figures from the same day ruined the mood with drops in both the year on year and month on month retail sales values. The ECB’s President Christine Lagarde gave a speech this week which outlined the Eurozone’s economy as one that is on the recovery, however this was later undermined by poor German market data which was released towards the end of the week. Investors are now questioning whether the Eurozone is really on the mend.
Monday noted the first day of negotiations for the EU and the UK. Both parties laid out their agendas and the market got their first glimpse of what the next 11 months will look like. The UK set out their case to strive for a Canadian-style deal which had some investors unnerved at the boldness, as worries rose about a no-deal Brexit once more. The euro entered the week on the back-foot after the previous week failed to return positive economic data releases.
Mid-week was an important day for the euro, with the Markit service PMI and PMI compositive both being unveiled. Both scores provided positive returns which helped give support to the euro. However, the same day also saw the Eurozone’s retail sales for December, which disappointed as both the year-on-year and month-on-month figures slipped. Wednesday also saw President Christine Lagarde give her speech outlining the Eurozone’s economy and outlook. In the speech she remained optimistic and hinted that the Eurozone is on its way to recovery, which helped the Euro find support.
To end the week, the euro dropped sharply as the German imports, exports and industrial production figures were released. All figures showed a decline, which suggested a slip in growth for the Eurozone, contradicting President Lagarde’s optimism in her Wednesday speech. Attention for the upcoming week will likely revolve around the EU-UK talks as well as updates regarding the coronavirus update and its newfound treatment. For now, the euro appears to be trading lower after the market took a hit with Friday’s shock German market figures.
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