Analysis and Opinion »

European Session – Euro weighed by ECB QE and Eurogroup meeting

XM Markets UUIIFXBR
Share on StockTwits
Published on
www.xm.com

EuropeThe single currency was boosted to a high of 1.0905 on the back of upbeat Eurozone data released during the European session today. Investor confidence rose to a 7 ½ year high as the Sentix Index improved to 18.6 this month, from a reading of 12.4 in February. Analysts had expected the index to improve to 15.0 in March. The survey of 1,025 investors and analysts was conducted between March 5 and March 7 and shows that they are shrugging off uncertainty over Greece and appear to see it as an isolated issue that will not impact the Eurozone as a whole.

The euro’s gains were limited however as the European Central Bank’s quantitative easing program was launched today. The Bank will begin buying bonds worth 1 trillion euro as part of its plan to deter deflation in the region and stimulate the economy. It will buy assets with negative yields of up to minus 0.20% which is the Bank’s current deposit rate. The euro eased lower later in the European session to 1.0854 where it has stabilized. Focus will be on the outcome of the Eurogroup meeting.

Sterling managed to reverse some of Friday’s moves in a calmer market today and in the absence of key data. Cable bounced off a 1-month low of 1.5031 to rise to 1.5122. UK employment data on Friday will be the main risk event of the week for the pound.

The dollar traded sideways versus the yen, consolidating gains made after Friday’s payrolls data that took the greenback to a 3-month high of 121.27. Japan’s GDP was revised lower today to 0.4% q/q from 0.6% q/q so this is weighing on the yen, while profit taking from the recent rally in the dollar/yen pair has kept the US currency from rising further versus the Japanese currency.

Share on StockTwits