The Italian government has told the European Commission that it plans to launch “a comprehensive plan of spending review and revenue enhancement” in a bid to avert a row over the country’s mounting debts.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR3.2%€7,350

Brussels wrote to Rome on Wednesday, expressing concern about its budget forecasts and warning the Italian government against its attempts to expand Italy’s budget.

Brussels is expected to bring back the disciplinary process against Italy should the government fail to convince the commission it is taking sufficient measures to bring down a debt burden which is the second highest in the eurozone after Greece.

Will the ECB attempt to artificially weaken the Euro?

Euro data this week including ECB decision

The main event for the euro is the meeting of the European Central Bank (ECB) on Thursday. The ECB’s assessment of the economy, its intentions for monetary policy and the level at which it intends to set interest rates is a big driver for the euro.

The ECB is widely anticipated to make changes to the parameters of its cheap loan programme or TLTRO (targeted long-term refinancing operation) programme. This provides Eurozone banks with cheap liquidity to help stimulate lending to the wider economy. TLTRO's is already in operation but instead of discontinuing them the ECB has decided to extend them.

This has come with mixed opinions from the different eurozone economies, with the recent shake up in the Members of the European Parliament (MEP’s) a shift could be considered if the debt crisis and low interest rates continues.

The market is unlikely to react much to the announcement as it has been widely spoken about already, and priced in. It is only in the event that the ECB does not implement Targeted Longer-term refinancing operations (TLTROs), that the market might react by pushing the euro higher, for example.

Other main events for the euro are the release of unemployment data and inflation data today. Unemployment is likely to remain unchanged at 7.7%, according to consensus estimates; Core Consumer Price Index (CPI) is expected to fall from 1.3% to 1%. YoY figures may fall from 1.7% to 1.3%, this is normally factored into the market however if this figure deviates from the expected value this could affect the euro exchange rate. These figures will be keenly watched by the ECB in their plan to keep the eurozone on track.

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