There’s no getting around the fact the coronavirus crisis has upended our lives, changing our perception of normal, casting uncertainty over the future, and taking a toll on people’s mental well-being.
- Stagnant German growth rate drags euro lower
- US dollar muted thanks to fall in US production
- Pound fails to hold onto gains ahead of weekend
Euro slumps as German growth data disappoints
Germany’s fourth quarter gross domestic product report proved disappointing, weighing the euro down on Friday.
Although the Eurozone’s largest economy avoided the potential contraction that some had feared, the lack of growth still raises the risk of the Eurozone’s powerhouse economy shedding fresh ground in the first quarter.
However, the single currency could find a rallying point this morning if the December Eurozone construction output increases as forecast.
Signs of resilience within the construction sector would go some way towards offsetting the negative impact of weak manufacturing data, limiting the potential for further euro losses in the short term.
Weak production limits US dollar upside
Support for the US dollar was generally limited ahead of the weekend thanks to another month of weakness in industrial and manufacturing production.
This latest evidence of the negative impact that weaker global trade growth is having on the US economy prevented USD exchange rates from making any particular gains.
With the Federal Reserve already showing signs of dovishness in recent remarks this underwhelming performance appeared to increase the risk of a potential interest rate cut.
However, any resurgence in market anxiety over the spread of Covid-19 and its global economic impact could offer the US dollar a boost today.
Potential UK budget delay knocks pound off uptrend
The pound failed to hold onto its recent gains on Friday as the initial market reaction to Sajid Javid’s abrupt departure started to fade.
As the government refused to confirm whether the upcoming budget will still proceed as scheduled this saw GBP exchange rates stumble.
In the absence of any fresh UK data releases the pound may struggle to return to a positive footing in the near term, given the lingering sense of uncertainty.
Signs of the EU hardening its negotiating stance ahead of the next round of UK-EU talks could also weigh heavily on GBP exchange rates.
Monday, 17th February 2020
10:00 EUR Eurozone Construction Output
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)