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27/05/24
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EUR Flat as German Business Climate Remains Steady
On Monday, the euro drifted and EUR/USD traded at about 1.0849, down 0.05% in the North American session. Markets in the US were closed for Memorial Day, which means the US currency will likely have a quiet day.
In Europe, the May German Ifo Business Climate was flat at 89.3. This was the same as April’s downwardly revised 89.3 and lower than the market forecast of 90.4.
The German economy, the biggest in the eurozone, has battled although there have been indications of recovery. In the first quarter, GDP grew by only 0.2% after contracting in Q4 of last year.
The ECB’s next meeting will be on June 6 and its credibility will be damaged if it doesn’t implement a rate cut. This would be the first time since March 2016 that the ECB has cut rates.
Last week, ECB President Christine Lagarde said that it was very likely that rates would be cut in June and added that she felt confident that inflation was under control. That sounds like a strong endorsement of a rate at the next meeting.
Joachim Nagel, the Bundesbank President also indicated that a rate cut would be made in June, as he dismissed worries over wage growth, which rose to 4.7%from 4.5%.
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