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Disappointing Data Leaves Euro Limp

Yesterday’s high: €1.1372

Yesterday’s low: €1.1317

Eurozone Retail Sector Weakens

The Eurozone’s retail sector did not fare overly well in October, with the month’s raft of retail PMIs highlighting a fresh loss of momentum.

This encouraged investors to sell out of the Euro on Tuesday, as it suggests that consumer confidence within the currency union has faltered somewhat.

Commentary from European Central Bank (ECB) President Mario Draghi did not improve the appeal of the single currency.

As Draghi maintained a distinctly dovish outlook on monetary policy, this encouraged bets that the central bank will leave interest rates on hold for some months, if not years, to come.

With German industrial production also found to have contracted further than forecast in September there was little reason to favour the Euro yesterday.

As a result, the GBP/EUR exchange rate remained on a narrow uptrend, in spite of more disappointing UK data.

Although the BRC like-for-like sales data showed a sharp slowdown in spending on the year in October, this failed to significantly weaken the Pound.

Euro Outlook: US Dollar Strength to Limit EUR Demand

A bullish US Dollar is likely to keep the Euro on a weaker footing today, with an absence of Eurozone data leaving EUR exchange rates lacking in potential rallying points.

Expectations are relatively positive for Thursday’s German trade data, meanwhile, which may encourage investors to buy back into the Euro.

Pressure could equally be in store for the GBP/EUR exchange rate as markets continue to speculate over the likely outcome of the current round of Brexit negotiations.

If there are any signs of the UK and EU moving closer to at least some form of agreement this could see the Pound extending its gains against the Euro further.

Key Events

9th November

07:00 German Trade Balance

09:00 ECB Publishes Economic Bulletin

 

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James Spurway

Currency Dealer

T: (0)1442 892 070

 

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