Eurozone Consumer Price Index (CPI) for July, yesterday came in lower than expected at -0.5% against a forecast -0.4%. The European Central Bank will be paying very close attention to this figure in its role of maintaining price stability. This puts further pressure on the European Central Bank to start engaging in interest rate reductions and/or quantitative easing to stimulate the Eurozone economy.

With growing concerns surrounding Germany’s economy, the market will be closely watching German and EU data releases on Thursday for both Manufacturing and Services Purchasing Managers Index (PMI). German Manufacturing data for August is forecast lower at 43.0 against a previous reading of 43.2 and Services data forecast lower at 54.1. Eurozone Manufacturing data is also forecast lower at 46.3 against a previous reading of 46.5 and Services data forecast lower at 53.0. If these data sets are lower than expected, potentially leading to euro movement.

ECB interest rate decision due on Thursday

ECB Monetary Policy Meeting

The focus of attention may be on the minutes of the meeting of the members of the European Central Bank on Thursday. The market will be looking to indications of the amount and type of stimulus the European Central Bank might be considering in September, to regain growth in the Eurozone.

This is particularly important as we could see Germany’s Gross Domestic Product (GDP) fall again in the third quarter this year, which could lead to a technical recession for the Eurozone’s biggest economy. Germany’s finance minister, Olaf Scholz did however provide reassurance by indicating that the government could prepare fiscal stimulus to support the German economy.

If you have an upcoming euro currency exchange, you may wish to contact your account manager to be kept up-to-date with the latest currency market movements.

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