The euro is mostly higher today after ending the day lower last Friday. The euro is currently the strongest against the US dollar and the Canadian dollar. The common currency is slightly lower against the pound and the Australian dollar. This week includes two significant political events for the Eurozone. The outcome of Italian elections and the SPD vote on another "grand coalition" agreement with Angela Merkel's CDU will be announced this coming Sunday. Looking at Italian politics, there were a number of riots this weekend as anti-fascist groups staged protests against racism across Italy. Silvio Berlusconi dismissed the protests, claiming that racism was a smaller issue relative to the problem of thousands of migrants from the Middle East and Africa. Berlusconi's center-right bloc and the M5S (Five Star Movement) are currently leading the polls. Turning to the economic calendar this week, upcoming data will help markets adjust their outlook on Eurozone growth and inflation. Recent figures have suggested that the Eurozone continues to expand, but at a slower pace relative to consensus estimates. Our short-term outlook on the euro is neutral, while our medium-term outlook is bullish.
EUR/USD is currently up and trading above 1.230. The euro is flat against the yen, with EUR/JPY trading above 131.30. Finally, the euro is down slightly against the pound, with EUR/GBP above 0.8790.
Looking at economic data from the Eurozone this week, we’ll see February inflation and manufacturing PMIs. On Tuesday, German Bundesbank President Weidmann will be speaking – he is widely expected to replace incumbent ECB President Mario Draghi. We’ll also get economic sentiment and consumer confidence. We’ll also see German February CPI figures. On Wednesday, we’ll see German Gfk consumer confidence and unemployment numbers. We’ll also see core January CPI and February headline CPI for the Eurozone. On Thursday, we’ll get February Markit manufacturing PMIs for the Eurozone. On Thursday, we’ll see German retail sales and Eurozone producer prices. Last week, Eurozone CPI figures met expectations while manufacturing PMIs were below consensus estimates.