Euro could fall into the neutral position ECB

The euro ended last week against currencies like the dollar and the pound sterling, but ultimately, the neutral position decidedly European Central Bank in their recent policy meeting monthly meeting creates some risk of deterioration of the currency in the short term. This is particularly true since the ECB President Jean-Claude Trichet seems to be somewhat concerned by the appreciation of the euro, as he puts it noted that "excessive volatility and disorderly movements in exchange rates affect negative for the economic and financial stability. "

In the coming week, event risk will be quite limited for the euro, even if some spills could spur volatility of the currency. On Tuesday, the German ZEW survey - an indicator of investor confidence - should rise slightly to 58.8 for the month of October, the highest since April 2006, 57.7. Such an improvement would be in line with the steady gains that we saw in action in recent months, but at the same time, the consolidation of the DAX below through September 5750 and in early October suggests a change may be minimal.

On Wednesday, the August reading of the Euro-zone industrial production is expected to increase by 1.2 per cent, which would be the first increase in 3 months and the largest increase since January 2008, and seems reasonable given similar improvements we saw in Germany and France.

On Thursday, the final reading of the Euro-zone CPI is expected to confirm that the annual rate fell to -0.3 percent in September from -0.2 percent. However, the ECB has said on several occasions in the past that they expect the inflation rate remains negative before returning to positive levels in the months ahead, after the readings in line with expectations should not have little impact.

Finally, on Friday, the euro-zone trade balance should be reduced to 2.5 billion euros for the month of August, which might reflect a decline in exports, but run counter to expectations an increase in industrial production. However, we have already seen that the German trade surplus be reduced during the same period, and as the largest economy in the region, this result tends to serve as a good leading indicator for the euro area.

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