- Hans-Werner Sinn, Ifo chief
The single currency continued its upside movement on Monday, with the EUR/USD pair moving closer to this year's high, following slightly stronger-than-expected Europe's inflation data and improved sentiment across German companies. The shared currency advanced 0.1% against the greenback, hitting 1.3759.
On Sunday the ECB's President Mario Draghi signalled the central bank's gathering in March will be critical in determining whether additional stimulus is needed. He also dismissed deflation fears, however, acknowledging that inflation expectations anchor in line with official projections of just slightly below the official target of 2% in the mid-term. Monday's data showed that consumer prices in the 18-nation bloc dropped at the fastest pace ever on a monthly basis, pushed lower by a slump in prices of non-energy industrial goods. The CPI indicator plunged 1.1% in January, keeping the annual inflation at 0.8% - unchanged for a second straight month. The positive thing is the revision of the previous reading, that was revised up by 0.1.%. Analysts, however, expected a figure of 0.7% that would prompt the ECB to act next month.
Another positive aspect that provided a boost to the Euro is German Ifo business climate that stood at 111.3 in February, beating analysts' expectations for a 110.7 reading and up from January's 110.6.
© Dukascopy Bank SA