Forex Flash: Eurozone economy continues to show signs of weakness - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that ECB Vice President Constancio stated yesterday that “the economy continued to give signs of weakness” while also emphasising the importance of the recent “significant” fall in inflation adding that a new rate cut was “always a possibility”.

He adds that the building expectations of further ECB easing are weighing upon the euro in the near-term although the sharp decline in Italian and Spanish government bond yields yesterday following the re-appointment of Italian President Napolitano are providing offsetting euro support. He writes, “President Napolitano now hopes to reach an agreement to form a government within days fostering support from both the left and right. Elsewhere the Norwegian krone’s under performance in 2013 extended further yesterday following comments from Norges Bank Governor Olsson stating that inflation was worryingly low.”