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Could stronger Eurozone production encourage euro gains?

business-articlesCould stronger Eurozone production encourage euro gains?
  • Higher levels of Eurozone industrial production to boost euro

  • US dollar under pressure ahead of inflation data

  • Weaker price pressures to dent New Zealand dollar

 
 

Rising industrial production to boost euro demand

 
October’s Eurozone industrial production data could offer a boost to the euro this morning if it rebounds from the monthly contraction seen in September.
 
Signs of resilient economic activity within the Eurozone should offer support to EUR exchange rates, even though yesterday’s ZEW economic sentiment indexes remained in negative territory.
 
On the other hand, any fresh slowdown in production could weigh heavily on demand for the single currency.
 
With the matter of the Italian budget still not resolved and with political tensions in France mounting the euro could struggle to find support today.
 
 

US dollar vulnerable to softening inflationary pressure

 
As forecasts point towards an easing of November’s US consumer price index the US dollar looks vulnerable to further selling pressure this afternoon.
 
Although the CPI is not the Federal Reserve’s preferred measure of inflation a slowdown here could still dent confidence in the prospect of future monetary tightening.
 
Markets already see the Fed leaving interest rates on hold for longer in 2019, limiting the appeal of the US dollar.
 
Unless inflationary pressure picks up USD exchange rates could lose further ground over the course of the day.
 
 

Weaker food price inflation to weigh down New Zealand dollar

 
The New Zealand dollar could see fresh weakness tonight if the latest New Zealand food price index fails to impress.
 
Investors expect to see price pressure ease from 0.6% to 0.4% on the year, a deterioration which points towards weaker inflation.
 
With the Reserve Bank of New Zealand (RBNZ) already looking set to maintain a cautious policy outlook for the foreseeable future a disappointing showing could weigh heavily on NZD exchange rates.
 
However, an uptick in prices could give the New Zealand dollar a fresh boost against its rivals.
 
 

Upcoming Data:

 
Wednesday, 12th December 2018
10:00 EUR Eurozone Industrial Production
13:30 USD Consumer Price Index
21:45 NZD Food Price Index

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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