The Euro ended the day unchanged against the US dollar and this is either a testament to the currency?s resilience to dollar strength or the market?s falling interest in what is typically the most actively traded currency pair.
According to the latest FXCM Speculative Sentiment index, it is the former since EUR/USD positioning is 8.7 percent above its monthly average. Given the weakness of recent economic data, the only things that are keeping the Euro propped are hawkish comments from ECB officials and continual demand from central banks. Both Eurozone consumer prices and labor costs fell short of expectations this morning which suggests that inflationary pressures are abating. However this doesn?t seem to matter to the ECB as member Quaden clearly stated today that monetary tightening has not ended. The same sentiment is shared by the Swiss National Bank who raised interest rates by 25bp today, bringing the mid point of their target range to 2.5 percent. If the pace of economic growth remains unchanged and the Swiss franc fails to rally, they said that “further increases in interest rates are likely in the months ahead.” Swiss retail sales are due for release tomorrow.