Drop for the Euro in Forex Markets as Central Bank Set to Meet

The common European currency saw a drop on Thursday as the European Central Bank prepared to meet.

The euro has had a difficult few weeks on the whole. In total, it has dropped in value to the tune of 1.6% – largely as a result of trader predictions that the central bank will preserve monetary policy at its current position for a long time to come.

Today’s meeting is likely to see the bank confirm that rates will rise in the coming year – but it is considered unlikely that any moves will be made right away.

Recent announcements of poor economic performance in major eurozone countries such as Germany is also likely to lead to caution from policymakers.

This morning, the euro was down 0.2% against the US dollar, resting at $1.1355.

Elsewhere, the pound avoided big drops and suffered just a small decline to $1.3043.

Despite problems elsewhere in the forex world, the US dollar did not particularly surge ahead. The dollar index, which assesses its performance compared to a basket of six other global currencies, managed only to remain firm at 96.06.

As the trading week begins to draw to a close, it’s worth looking at what events will round it off – and what’s on the agenda for next week too.

Tomorrow (Friday) has a relatively sparse economic calendar. The World Economic Forum will continue in Davos, while German business climate data for January is due out at 9am GMT.

Mortgage approvals information for December in Britain is expected at 9.30am GMT.

Looking ahead to Monday of next week, some significant data is due from New Zealand at 10.45pm GMT. Imports and exports information for December will be out, as will the overall trade balance.

On Tuesday, Italian producer price index information for December is due at 9am GMT while French consumer confidence information for January will be out a little earlier at 7.45am GMT.

Consumer confidence information from the US covering January is expected at 3pm GMT.

On Wednesday, Australian consumer price index information for the fourth quarter of last year will be out at 12.30am GMT. Year on year, it was last recorded at 1.9%.

Preliminary French gross domestic product data for the same period is due out at 6.30am GMT. German import price index information for December will follow at 7am GMT. Year on year, it is due to drop from 3.1% to 2.1%.

Italian consumer confidence information for January is out at 9am GMT. This is forecast to show a shift upwards from 113.1 to 114.0.

Annualised US gross domestic product data for the fourth quarter of last year is expected at 1.30pm GMT. This is forecast to show a significant drop from 3.4% to 2.8%.

Preliminary core American personal consumption expenditure information for the same period is out at the same time.

The day will be rounded off by the US Federal Reserve central bank’s interest rate decision, which is expected at 7pm GMT. The current rate is 2.5%.