The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
The euro was largely on good form last week, making gains versus its regular peers in a week peppered with positive data releases.
Tuesday’s data slew impressed, showing above-forecast preliminary German GDP for the third quarter of 2.3%, above-forecast year-on-year Italian Q3 GDP of 1.8%, and steady Eurozone Q3 GDP of 0.6% on the quarter. Industrial production also bettered expectations, slowing from 3.9% to 3.3% instead of to 3.2%.
Forecast-beating trade balance figures on Wednesday and current account and construction data on Friday further improved the rosy economic picture for the Eurozone. Even the usual cautious comments from European Central Bank (ECB) President Mario Draghi on Friday failed to particularly weigh on the euro.
Much of the week’s euro volatility will be caused by changes to the monetary policy outlook, given several appearances from European Central Bank (ECB) officials.
As well as speeches today from Mario Draghi and Vitor Constancio still to come, Benoît Cœuré will speak publicly later in the week.
Thursday also sees the release of the latest set of monetary policy meeting minutes, so markets will be looking for hints regarding any further adjustments to the quantitative easing programme or interest rates.
The 26th October monetary policy meeting saw the ECB finally decide to adjust the quantitative easing programme, slashing the rate of asset purchasing in half to €30 billion per month. However, markets were disappointed that the Governing Council had opted to extend the duration of the programme by nine months instead of the expected six.
The minutes could therefore prove cautious in tone, which could weaken the euro.
Eurozone data is somewhat lacking this week, although Wednesday’s consumer confidence figures, Thursday’s run of preliminary manufacturing, services and composite PMIs, and Friday’s German Ifo business surveys – all for November – could alter the Eurozone economic outlook.
The Eurozone economy is currently on bold form and expected to post its strongest annual growth in ten years, so markets would appreciate it if the week’s ecostats proved further evidence to strengthen the believe that the bloc is in robust health.
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)