Morning Forex Fundamental: EUR

Morning Forex Fundamental: EUR

'The ECB is reluctant to use the remaining room to maneuver' - David Mackie, an economist at JP Morgan

The 17-nation bloc current account surplus narrowed in the first month of 2013, dragged down by deficit for current transfers, the European Central Bank said on Wednesday. Region's seasonally adjusted current account fell to €14.8 billion in January, down from €16.0 billion in the preceding month. The main reason was that a surplus for goods, services and income of €12.3 billion, €7.8 billion and €6.5 billion, respectively, were offset by a deficit for current transfers, which stood at €11.9 billion. For a whole 2012, region's current account recorded a surplus of €127.1 billion for the period ending in January, representing 1.3% of the Eurozone GDP, compared to a €14.6 billion or 0.2% of GDP recorded for the previous 12-month period.

'The ECB is reluctant to use the remaining room to maneuver. Cuts in the main policy rate are being kept for an even rainier day,' David Mackie, an economist at JP Morgan, wrote in a research note. 'We believe that the ECB should respond to this macro outlook.'

'There are no easy answers,' European Council President Herman Van Rompuy, who chairs the summit, told a news conference on Thursday night. 'The good progress towards structurally balanced budgets must continue,' he added.