After the euro weakened last Friday, the common currency is trading sideways this morning. The currency has been weak since the October ECB meeting, and our medium-term outlook remains bearish. As eurozone bond yields remain low, the currency is expected to stay weak, particularly against the US dollar as US bond yields strengthen. In upcoming economic data, we'll see Markit Composite PMIs later today as well producer prices. Forecasts suggest that optimism for economic growth remains strong, while inflation should keep ticking up.
The EUR/USD exchange rate is trading close to 1.1610. Looking at EUR/JPY, the pair is up today following comments from Bank of Japan Governor Kuroda is currently trading just above 132.70. The euro is down slightly against the pound, with EUR/GBP now trading above 0.8880.
This week’s Eurozone economic calendar includes a fair amount of survey data and trade balance figures. On Monday, we’ll see Markit Services and Composite PMIs for the Eurozone, Germany and France. We’ll also see Eurozone producer prices. On Tuesday, we’ll see German industrial production and Eurozone retail sales. On Thursday, we’ll see German trade balances. Last week, GDP growth figures exceeded expectations while inflation came in below estimates.