Unsurprisingly Mario Draghi tried to talk down the euro over the week end when he was meeting with the IMF and World Bank giving yet further indication that he will act as and when required either if inflation remains low for too long or if the euro continues to appreciate. The reaction from the single currency has been somewhat muted however with EURUSD only softening to 1.3840 which is also a little surprising considering risk appetite this morning is hardly explosive in the light of mounting tensions in Ukraine. Few would argue the fact that in the past year and a half the euro has defied gravity. Even in the face of falling inflation and the ECB continually talking down the single currency, its march towards 1.4000 has looked unstoppable as investors are tired of words and they want to see action. There’s still plenty of upside the euro could see before the strength of the currency really does become a concern for the Eurozone, but if we do see plus 1.4000 and beyond for a prolonged period, many will be feeling the pinch.
The start of the week is seeing indices on a softer footing as a result of geopolitical concerns and gold’s safe haven status is playing out again with the precious metal already hitting 1330.0 this morning. This shortened week for ahead of the Easter break has a few important data releases with Eurozone industrial production this morning, then US retail sales later and from the UK we see inflation figures tomorrow then unemployment data on Wednesday. Sterling will be one to watch as a result.