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Could Eurozone inflation disappointment drag euro lower?

business-articlesCould Eurozone inflation disappointment drag euro lower?
  • Weaker Eurozone inflation could extend euro losses

  • Canadian dollar under pressure ahead of GDP data

  • US dollar looks for boost on Chicago PMI

 
 

Easing inflation weighs on euro exchange rates

 
After November’s German consumer price index eased from 2.5% to 2.3% on the year the mood towards the euro soured.
 
Forecasts point towards a similarly discouraging performance from this morning’s corresponding Eurozone CPI, leaving EUR exchange rates exposed to further downside pressure.
 
If the headline inflation rate dips from 2.2% to 2.0% as anticipated demand for the single currency is likely to diminish further.
 
As a weaker showing would encourage the European Central Bank (ECB) to maintain a more cautious policy outlook the euro could struggle to find any support today.
 
 

Canadian dollar vulnerable to weaker gross domestic product

 
Canadian dollar exchange rates look set to extend their downtrend today with the release of September’s gross domestic product data.
 
Investors anticipate a fresh loss of growth momentum if GDP slows from 2.5% to 2.3% on the year, even though no change is forecast for the monthly reading.
 
A fresh knock to confidence in the underlying health of the Canadian economy would expose the Canadian dollar to another bout of selling pressure this afternoon.
 
With oil prices looking set to remain under pressure for the foreseeable future CAD exchange rates are likely to maintain a downside bias in the near term.
 
 

Improved Chicago PMI to offer US dollar boost

 
Signs of increased reluctance among Federal Reserve policymakers have limited the appeal of the US dollar this week.
 
However, if November’s Chicago purchasing managers index shows an improvement on the month this could give USD exchange rates a boost.
 
As long as the US economy demonstrates signs of resilience in the face of the ongoing US-China trade spat the losses of the US dollar should prove limited.
 
On the other hand, another weak showing could leave USD exchange rates on the back foot heading into the weekend.
 
 

Upcoming Data:

 
Friday, 30th November 2018
10:00 EUR Eurozone Consumer Price Index
13:30 CAD Gross Domestic Product
14:45 USD Chicago Purchasing Manager 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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