The euro finished last week on a sour note, with EUR/USD falling to its lowest level in a month. After a gap lower to kick off this week, traders feared more of the same, but stronger-than-anticipated economic data from the Eurozone turned sentiment around.
Most European Central Bank policy makers judged that buying government debt was the only option big enough to fight the threat of deflation when they met last month, an official account of the debate shows.
On Tuesday, we previewed today’s high-stakes Riksbank meeting, concluding, “Sweden’s 0% interest rate may actually look attractive compared to the negative interest rates in the Eurozone and Denmark. Therefore, the central bank may choose to cut interest rates slightly to -0.1% or -0.2% to prevent any further appreciation in the krona."