ECB Weber Confirms Hawish Bias for Euro

Other than US dollar data, the Euro had support from comments made in the overnight regarding further inflationary pressures, supportive of higher interest rates in the Eurozone.

According to European Central Bank council member Axel Weber, inflationary pressures are expected to “remain above our stability threshold” lending the monetary authority to “do what is necessary to maintain price stability.” Although this is nothing new, the market has been pricing in the likelihood of two more rate hikes by the end of the year, it does provide the market for ample impetus in making a push higher. Incidentally, the effects were exacerbated as the economic schedule was relatively absent for the day, with the exception of the region?s April trade balance which improved higher than expected, rising 1.8 billion euros in the month of April. Subsequently, it was revealed that the trade gap with China expanded by a whopping 33 percent (for more insight click here). The enlarged deficit is likely to spur further rhetoric from the EU Trade Commission, similar to that of US Congressman in the previous week. Separately, Swiss April adjusted retail sales figures were higher by 3.2 percent. Positive for the Swiss economy as a whole, the figure was well below the 5.5 percent expected by the consensus, leaving some room for selling the franc.