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Geo-Politics and Economic Data Put the EUR in the Spotlight

3rd quarter GDP numbers could add to the EUR’s troubles, with political uncertainty in Germany adding to a muddied political landscape.
Bob Mason
Euros green

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side, with stats limited to September employment numbers out of Japan and September building approval figures out of Australia.

For the Japanese Yen, the jobs / applications ratio stood at 1.64 in September, coming in ahead of a forecasted and August 1.63.

With the jobs / applications ratio on the rise, the unemployment rate came in at 2.3%, which was better than a forecasted hold at 2.4%

The Japanese Yen moved from ¥112.362 to ¥112.364 against the U.S Dollar, upon release of the figures, before easing to ¥112.59 at the time of writing, down 0.20% for the session, the stats having a muted impact on the Yen following the disappointing retail sales figures on Monday.

For the Aussie Dollar, building approvals rose by 3.3% in September, coming in ahead of a forecasted 3% rise, following a revised 8.1% fall in August.

The Aussie Dollar moved from $0.70667 to $0.70688 upon release of the figures, before rising to $0.7072 at the time of writing, up 0.24% for the session.

Elsewhere, the Kiwi Dollar rally continued with a 0.20% to $0.6535, the gains coming in spite of Trump looking to prepare tariffs on the remaining $257bn worth of Chinese goods.

In the equity markets, it was a mixed bag through the early part of the day, the Nikkei finding support off the back of the weaker Yen, up 0.84% at the time of writing, with the ASX200 up 0.11%, while the Hang Seng and CSI300 were down 0.68% and by 0.57%, the talk of more sanctions weighing on the pair.

The Day Ahead:

For the EUR, it’s a busy day ahead, with key stats scheduled for release including prelim October inflation numbers out of Spain, France and Germany, 1st estimate GDP numbers for the 3rd quarter out of France, Spain and the Eurozone, together with October unemployment numbers out of Germany and September consumer spending figures out of France.

With concerns over the Eurozone’s economic outlook on the rise, following recent private sector PMI numbers, today’s GDP numbers could well add further pressure on the EUR, with forecasts pointing to slower growth through the 3rd quarter.

Outside of the numbers, geo-politics will continue to be an influence, stability within the Eurozone coming under a greater threat following Merkel’s decision to step down as CDU leader, with the question now being whether the Grand Coalition can survive with a new leader of the CDU. Throw in Italy and the ongoing dramas with the budget and the expected slowdown in the economy and it’s not looking too good.

At the time of writing, the EUR was up 0.03% to $1.1376, with noise from Germany, Italy and today’s stats in focus through the day.

For the Pound, there are no material stats scheduled for release, leaving the Pound in the hands of Brexit chatter and continued market reaction to the autumn budget announced on Monday, with spending plans providing some much needed support for the Pound.

At the time of writing, the Pound was up 0.07% to $1.2802

Across the Pond, economic data scheduled for release is on the lighter side, with stats limited to August house price figures and October consumer confidence numbers.

Focus will likely be on the CB Consumer Confidence numbers, with the FED’s intentions on monetary policy, recent equity market volatility and concerns over the ongoing trade war between the U.S and China possible reasons for a drop in confidence, though with wage growth picking up and labour market conditions continuing to support, elevated confidence levels are expected to continue to hold near-term.

Of interest ahead of the consumer confidence numbers will be the August house price figures, with rising mortgage rates and falling rentals weighing on demand, which has led to a decline in house prices in certain areas.

Outside of the numbers, chatter from the Oval Office will also influence, with Trump now reportedly looking to prepare tariffs for the remaining $257bn worth of Chinese goods ahead of his much talked about meeting with Premier Xi next month.

At the time of writing, the Dollar Spot Index was up 0.10% to 96.68, with today’s stats and the Oval Office the key drivers through the day.

For the Loonie, it’s another quiet day on the data front, leaving the Loonie in the hands of market risk sentiment, with BoC Governor Poloz scheduled to speak late in the session that could provide some direction, though with a lack of stats since last week’s BoC, influence is likely to be limited.

The Loonie was up 0.12% to C$1.3118 against the U.S Dollar at the time of writing, the Loonie finding some much needed support in the early part of the day.

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