Two representatives of the ECB, Christian Noyer and Benoit Coeur sent the euro to 1.1159. Coeur announced that the regulator could extend their QE program all the way until the beginning of summer for seasonal reasons. Noyer stated that the ECB could extend the QE program in order to achieve their 2% inflation target.
The effect of both statements form these ECB representatives equated to a loss of 150 points for the euro and a loss of 160 for the pound. The yield on German 10 year bonds dropped by 15% to 0.555%. The dollar has started to rally along the trend, whilst the euro has slipped.
The index for current economic conditions and the index for economic sentiment in Germany disappointed investors. The economic sentiment in Europe also didn’t meet its forecasted value. Inflation was as expected.
Data published about the Eurozone and Germany
The May ZEW German index for business expectations stood at 41.9 (forecasted 49.5, previous 53.3). The May ZEW index for the assessment of the current situation stood at 65.7 (forecasted 68, previous 70.2).
The March balance of trade in the Eurozone was 19.7 billion euro (forecasted 23.2 billion euros, previous 22.0 billion euros).
The Eurozone April Consumer Price Index was 0.2% MOM, 0.0% YOY (forecasted 0.2% MOM, 0.0% YOY, previous 1.1% MOM, -0.1% YOY).
The pound/dollar followed the euro downwards and hastened downwards further after data on inflation came out.
Data published about the UK
The UK April Consumer Price Index was 0.2% MOM, -0.1% YOY (forecasted 0.4% MOM, 0.0% YOY, previous 0.2% MOM, 0.0% YOY).
The UK April retail sales index was 0.4% MOM, 0.9% YOY (forecasted 0.4% MOM, 0.9% YOY, previous 0.2% MOM, 0.9% YOY).
The April UK Producer Price Index (output) was 0.1% MOM, -1.7% YOY (forecasted 0.1% MOM, -1.6% YOY, previous 0.2% MOM, -1.7% YOY).
The April UK Producer Price Index (output) not including food, alcohol, tobacco and fuel was 0.0% MOM, 0.1% YOY (forecasted 0.0% MOM, 0.1% YOY, previous 0.0% MOM, 0.1% YOY).
The April UK Producer Price Index (input) was 0.4% MOM, -11.7% YOY (forecasted 0.8% MOM, -11.6% YOY, previous 0.3% MOM, -13.0% YOY).
Planned events on the American session
At 15:30 EET we will know the April residential construction figures for the US. At 18:45 EET there’s a planned speech to be made by the Bank of Canada’s Poloza.
The euro and the dollar have reached important price levels. The euro/dollar has almost covered the growth that it saw last week. There’s now a push on the 1.1150/30 zone to return to 1.1050. Since the euro fall against the dollar was by 150 points, today I expect a correctional movement. This could be a lateral movement in the region of 1.1200 or a rebound to 1.1225/30.
The pound/dollar rate returned to the trend line. We want it to partially close in the 1.5485/90 zone since, after a fall by 160 points, it’s possible that it’ll rebound to 1.5533. If you’re going to sell the pound then it’s better to leave it till tomorrow. The rate of the euro and pound is currently way off the trend below the D3 line (a risky zone for selling).