Equity markets picked up in the Asian session as US stimulus optimism buoyed risk assets.
Better-than-expected economic data could support the Euro against its major peers in the coming weeks.
EUR/USD rates consolidate above key inflection point.
US stimulus optimism boosted risk appetite in the Asian session. Australia’s ASX 200 rose 0.84%, while Japan’s Nikkei 225 surged 1.55%.
In FX markets, the risk-sensitive AUD, NZD and NOK largely outperformed. Meanwhile, the safe haven-associated USD, JPY and CHF lost ground versus major peers.
Eurozone unemployment data for December and US manufacturing PMI figures will be in focus.
Upbeat GDP and Inflation Figures to Underpin Euro
The Euro could pare losses versus the greenback in the coming weeks, on upbeat economic data.
Q4 GDP prints out of France, Germany and Spain indicate that the trading bloc’s economy was more resilient than expected. Preliminary data showed that the Spanish economy expanded by 0.4% (est -1.5%), while the German and French economies contracted less than forecast.
An unexpected spike in German inflation could also underpin the Euro with CPI rising to 1% in January (est. 0.7%). Although the European Central Bank member Isabel Schnabel warned that this is most likely a short term anomaly.
In fact, other ECB members have supported further use of stimulus tools to boost inflation, including the possibility of cutting interest rates further into negative territory.
Euro-zone’s core inflation rate expected to climb to 0.9% (prev. 0.2%) and headline inflation forecast to rise to 0.5% (prev. -0.3%) in January.
A less-than-expected contraction in Euro-area GDP combined with a surprise jump in inflation, could diminish the possibility of further easing from the ECB.