The Euro continued to rise today thanks to stronger inflation data, hawkish comments from ECB officials and buying interest related to the RBS and ABN Amro deal. German wholesale prices quadrupled expectations, illustrating why the European Central Bank have put inflation ahead of growth.
According to the October ECB bulletin, growth risks are to the downside, but prices still a worry. ECB Weber was a bit more direct when he warned that there may be need for extra ECB action given the inflation pressures in the coming months. Junker continues to make comments about the Euro; he says that he supports a strong currency but would not go as far as to say that it is in Europe’s best interest. We have more ECB speeches tomorrow, along with French CPI numbers and Eurozone industrial production.
Written by Kathy Lien, Chief Currency Strategist for DailyFX.com