Euro started the fourth week of this year at approximately 1.08930 per US dollar (EUR/USD).
The euro’s side trading comes in light of the anticipation of the ECB meeting and a set of PMI figures for the Eurozone.
The central bank is expected to continue its hawkish tone and emphasize that there will be no interest rate cut soon. While the return of upward inflation risks to the fore may reinforce monetary policymakers’ hawkish stance. On the other hand, ECB is facing the high inflation and the decline in various economic activities for more than a year and a half.
Speaking of activities, this week we are also approaching the preliminary January reading of the manufacturing and services PMIs for Germany, France and the Eurozone. While activities are expected to continue to decline in most cases, but at a slower pace than last December.
On the other hand, on the other side of the Atlantic, hopes for a Fed cut in interest rates in March appear to be diminishing little by little, as the probability of a 25-basis point cut has declined to about 46%, down from more than 75% about a week ago.
In bond markets, Eurozone bond yields declined today after reaching their highest levels in a month and a half last Friday. The yield on ten-year German Bunds fell to 2.255% today after reaching the highest level since last December 5 at 2.330%.
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