Last week the Euro started off in a positive position as investors focused on the Federal Open Market Committee’s announcement and the outlook for the Eurozone brightened as manufacturing PMI for the currency block and Germany trumped estimates.
Upbeat economic sentiment surveys for the Eurozone and its largest economy also kept the Euro trading strongly.
However, the common currency went on to tumble against peers like the Pound and US Dollar as global developments supported its two major currency rivals.
Firstly, Sterling broadly strengthened in response to unexpectedly upbeat UK employment data.
Secondly, the US Dollar received a significant boost as the Federal Open Market Committee unexpectedly opted to taper the level of asset purchases by $10 billion, double the amount forecast by economists.
The EUR/USD and EUR/GBP pairings went on to extend declines as a current assessment IFO measure for Germany declined unexpectedly while construction output in the Eurozone plummeted.
On Friday further pressure was applied to the Euro as top ratings Agency Standard and Poor’s opted to downgrade the European Union due to concerns regarding the creditworthiness of some of its members.
Although Friday’s encouraging consumer confidence reports for the Eurozone and Germany helped to limit Euro losses, the common currency still closed the week softer than it began against the US Dollar and Pound.
As the European session opened on Monday, the Euro consolidated declines against the Pound as the British asset strengthened in response to a BoE official’s attempts to calm housing bubble fears.
The common currency was little affected by a report showing an unexpected increase in the German import price index. The index gained by 0.1 per cent in November, month-on-month, rather than falling the 0.1 per cent expected.
The Euro could slide further against the US Dollar during North American trading if the University of Michigan index shows the improvement expected.
US personal income/spending figures will also be of interest in an otherwise quiet news day.
Key Eurozone data for the week ahead:
With the Christmas break dominating the middle of the week, Eurozone data will be limited in the days ahead. Reports to look out for include tomorrow’s growth data for France, Friday’s Spanish current account report and Greek PPI.
Euro Exchange Rates (as of 11:50 am GMT)
The Euro is trading against the Pound in the region of 0.8367 <
The Euro is trading against the US Dollar in the region of 1.3683 >
The Euro is trading against the Australian Dollar in the region of 1.5317 <
The Euro is trading against the New Zealand Dollar in the region of 1.6695 >
The Euro is trading against the Canadian Dollar in the region of 1.4526 <
The Pound is trading against the Euro in the region of 1.1949 >
The US Dollar is trading against the Euro in the region of 0.7313 <
The Australian Dollar is trading against the Euro in the region of 0.6531 <