Euro higher despite poor industrial production

The euro is a touch higher versus the US dollar despite France and Italy revealing soft industrial production reports.

The EUR/USD is trading at $1.3644, up 0.07% as traders remain unfazed by disappointing reports from two of the largest countries in the eurozone. France and Italy reported a decline of 0.3% and 0.9% respectively in December; both countries announcements came in below market consensus.

Last week, Mario Draghi of the European Central Bank (ECB) claimed he did not see evidence of deflation in the region despite the rate of inflation falling. Today’s announcements highlight the weak demand in the eurozone.

The ECB has come under pressure to lower interest rates further recently or to introduce a stimulus package in an effort to encourage economic activity; however, Mr Draghi doesn’t want to loosen monetary policy again until he has to.

As Alastair McCaig stated, a drop below $1.3475 could be an indication to go short. Mr Draghi will make an announcement on Wednesday at 3.30pm (London time); any dovish suggestions could push the euro lower.

Spot FX EUR/USD

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.