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Deteriorating Eurozone trade to drag euro lower today

business-articlesDeteriorating Eurozone trade to drag euro lower today
  • Weakening Eurozone trade balance could dent euro

  • US Dollar vulnerable to softening US manufacturing sector

  • Brexit developments to keep pound under pressure


Euro vulnerable to narrowed trade surplus

Confidence in the euro could deteriorate further this morning if October’s Eurozone trade balance figure weakens as forecast.
A narrowing of the trade surplus would highlight the pressure that the Eurozone economy faces thanks to trade tensions and the slowing global economy.
Following on the heels of Friday’s underwhelming manufacturing and services PMIs this would give investors further incentive to sell out of the single currency.
However, if the surplus is found to have widened on the month this could help EUR exchange rates to recover some of their lost ground.

Signs of weakening US manufacturing weigh on US dollar

The US dollar may struggle to hold onto its latest gains on the back of this afternoon’s Empire manufacturing index.
As forecasts point towards a dip in the index this could provoke fresh jitters over the outlook of the US economy, given other recent signs of manufacturing weakness.
Any evidence of slowing US growth could weigh heavily on the US dollar, with weak data giving Federal Reserve policymakers further cause for caution.
If market risk appetite picks up once again this may also drag USD exchange rates down.

Brexit speculation continues to drive pound movement

Speculation over Brexit looks set to keep the pound in a state of flux today as hopes of a breakthrough diminish.
With EU leaders unwilling to reopen negotiations on the Withdrawal Agreement investors still see little chance of the deal making it through a parliamentary vote.
The persistent sense of uncertainty surrounding the future of the UK economy is likely to limit the appeal of the pound for some time to come.
Any fresh political developments in the UK could equally encourage investors to sell out of the pound.

Upcoming Data:

Monday, 17th December 2018
10:00 EUR Eurozone Trade Balance
13:30 USD Empire Manufacturing 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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