The euro is mixed today - the common currency is selling off against the US dollar and Australian dollar while trading sideways against the British pound, Japanese yen and the Canadian dollar. Yesterday was an eventful day for the common currency thanks to announcements from the Eurogroup meeting. Specifically, Spain’s Luis de Guindos was selected to be the next European Central Bank Vice President. Guindos was selected over Ireland's Philip Lane. Ireland withdrew Lane's candidacy just before the decision. As the vice president post is now occupied by a southern European, the role of president is more likely to be awarded to a northerner. Specifically, the current German Bundesbank Governor Jens Weidmann could be elected to replace Mario Draghi in 2019. If the ECB is led by a member of the Bundesbank, the Bank is more likely to adopt a tighter monetary policy. Turning to politics, German SPD delegates have started the process of voting on another "grand coalition" deal. The results will be announced on March 4, the same day that Italian election results will be announced. Our short-term and medium-term outlook on the currency remains bullish.
EUR/USD is currently flat and trading above 1.2380. The euro is up against the yen, with EUR/JPY trading above 132.30. Finally, the euro is flat against the pound, with EUR/GBP above 0.8860.
Looking at economic data from the Eurozone this week, we’ll see a fair number of sentiment surveys and the Eurozone consumer price index. Spain’s Luis de Guindos was selected to be the next European Central Bank Vice President at the Eurogroup meeting. German producer prices were above expectations (2.1% vs. 1.9% expected). Later today, we’ll see Eurozone consumer confidence and the ZEW survey for the monetary union. On Wednesday, an ECB meeting (non-monetary policy related) is scheduled. We’ll also see Markit PMIs (services, manufacturing and composite) on that day. On Thursday, we’ll see IFO survey data from Germany and see the ECB’s monetary policy meeting accounts. Friday is the most important day. We’ll see Q4 German GDP growth and the Eurozone consumer price index. Last week, German consumer prices met expectations.