Talking Points:
- Eurozone Business Climate indicator rises to the highest level since June 2011
- Economic sentiment in the Euro-Zone also rises to six-year high
- But positive data fail to lift Euro as political concerns and Trump speech take centre stage
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.
Euro crosses failed to move despite data pointing to growth continuing to pick up in the Euro-Zone.
The Economic Sentiment Indicator released by Eurostat this morning rose to 108.0 in February from 107.9 the month before, in line with the consensus forecast. It’s now at its highest since March 2011. The Business Climate indicator rose from 0.76 points in January to 0.82, the highest level since June 2011. The measure for service providers increased to 13.8 from 12.8 in January, reaching its highest point since October 2007.
The positive views from industry and the service sector outweighed weakness among consumers and the retail sector. Sentiment among Eurozone retailers dipped to a three-month low in February. Eurozone consumer confidence dipped to a three-month low in February after rising over the previous five months to a 21-month high in January.
The largely positive data do little to alter the narrative on the Euro – namely upbeat growth prospects but selling pressure remaining owing to palpable political uncertainties ahead.
Elections are looming in the Netherlands, France and Germany this year -- there could also be an election in Italy following Prime Minister Matteo’s resignation -- with markets nervous about the rise of far-right populism in Europe. It is also highly possible that Eurozone growth will be negatively hit as the UK triggers Article 50 (the British government is aiming to do this by the end of March) and negotiations begin on the terms of the UK’s divorce from the EU.
The Euro is little changed versus the Dollar Monday at 1.0583 as traders are reticent to enter strong positions ahead of Donald Trump’s crucial address to Congress Tuesday where he’ll outline his tax and fiscal policies.
The single currency has made some gains on the British Pound, with EURGBP trading at 0.8527 a rise 0.0040 on the day. But that move is led by fears over a likely second Scottish referendum hitting the Pound across the board overnight. Those concerns pushed GBPUSD to its lowest level in 12 days, and sent the FTSE up over 12.00 on the day.
EUR/USD 15-Minute Chart (Intraday, February 27)
--- Written by Oliver Morrison, Analyst
To contact Oliver, email him at oliver.morrison@ig.com
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