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Can euro shake off disappointing inflation data today?

business-articlesCan euro shake off disappointing inflation data today?
  • Euro softens ahead of German business sentiment survey

  • Stronger manufacturing sales to shore up Canadian dollar

  • US Dollar losses forecast on softening construction sector


Euro vulnerable to weaker German business confidence

The surprise downward revision to November’s finalised Eurozone inflation rate left the euro on a weaker footing yesterday.
Demand for the single currency could weaken further this morning if the latest German IFO business sentiment survey points towards a softening in domestic confidence.
Evidence that businesses are continuing to take a more cautious view of the economic outlook would leave EUR exchange rates exposed to fresh downside pressure.
Any improvement in sentiment, on the other hand, could see the euro recover some of its recent losses.

Improved manufacturing sales to boost Canadian dollar

Confidence in the Canadian economy may improve this afternoon if October’s manufacturing sales data shows an uptick on the month.
Forecasts point towards solid growth of 0.5%, something which could encourage investors to buy back into the Canadian dollar.
Another underwhelming performance, though, would dent CAD exchange rates further as the odds of a Bank of Canada (BoC) interest rate hike continue to diminish.
Unless oil prices pick up sharply today this is unlikely to give the Canadian dollar much of a boost against its rivals.

Signs of weakening construction sector to weigh on US dollar

The appeal of the US dollar could deteriorate further today if November’s US housing starts and building permits data fail to impress.
While housing starts are expected to show only limited growth on the month the corresponding building permits figure is forecast to contract once again.
Evidence of persistent weakness within the US construction sector would leave USD exchange rates exposed to fresh selling pressure.
As long as domestic data continues to underwhelm investors the case for the Federal Reserve to raise interest rates further in 2019 is likely to diminish.

Upcoming Data:

Tuesday, 18th December 2018
09:00 EUR German IFO Business Climate Index
13:30 CAD Manufacturing Sales
13:30 USD Housing Starts
13:30 USD Building Permits

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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