Daily currency report
Overview
The disappointing growth figures released in the eurozone helped to push the single currency lower. The eurozone has now experienced six consecutive quarters of negative growth rates. Weak growth threatens price stability and therefore keeps the door open for additional rate cuts at the European Central Bank. The ECB’s Draghi is scheduled to speak just after the final HICP figures. The figures, which are well under the bank’s target, could allow for him to sound a dovish tone, putting additional selling pressure on the currency. Sterling was supported despite the threat to use negative interest rates in the BoE’s quarterly inflation report.
Sterling
The Bank of England’s King announced in the bank’s quarterly inflation report that the outlook for the economy in the UK had brightened and that the balance of risks for inflation put the rate at two per cent or target by 2016. Claimant count data fell, while the rate of unemployment dipped. The better employment news was offset by weak earnings. So while there may additional jobs in the UK, earnings are not moving any higher.
US dollar
Economic data from the US featured poor results. Output figures turned negative, while a NY regional manufacturing survey plunged. Another low weekly jobless claims figure will continue to support the dollar, while inflation figures will be glossed over. Inflationary pressures around the globe are mostly subdued despite the glut of monetisation that has occurred since the financial crisis.
Euro
Eurozone GDP fell into negative territory for the sixth consecutive quarter according to economic data released. The figures helped weaken the euro as investors brought forward expectations of continued rate cuts by the European Central Bank.