UK government borrowing figures yesterday beat forecasts and showed the lowest borrowing for an August since the financial crisis.
Eurozone industry had a good month in May, but the data released on Wednesday failed to boost EUR. This was because German wholesale prices stagnated on the month in June and growth slowed from 3.1% to 2.5% year-on-year, pointing to a weakening of inflationary pressures. This gives the European Central Bank (ECB) even more reason to hold tight on changing interest rates.
On Thursday, those tensions regarding the German trade surplus resurfaced as French President Emmanuel Macron took aim at the windfall. He claimed that Germany was benefitting from a ‘dysfunctional’ Eurozone and that it had a responsibility to use the surplus for the benefit of the Eurozone. Germany has long been criticised for failing to reinvest its budget underspends in ways that would boost domestic demand and therefore internal Eurozone trade, improving the economies of its neighbours.
Weakness in the US dollar benefitted the euro on Friday after a run of poor domestic data. Eurozone data was more positive, although the Eurozone trade surplus for May failed to rise by quite as much as forecast, hitting €19.7 instead of €20.2 billion on a seasonally-adjusted basis.
Influential German ZEW surveys of business are set for release on Tuesday, but the main event of this week will be the European Central Bank’s latest monetary policy meeting. No changes are expected to interest rates, but markets will be hoping this meeting is the one that finally sees discussion of changes to the vast quantitative easing programme.
Phil joined the corporate foreign exchange department in 2000, and initially worked as a Senior Executive Dealer on the private client desk. In 2007, Phil moved to the corporate dealing desk as a corporate dealer and now oversees the corporate trading desk. Phil helps to manage the trading activity of the dealing desk and also works with a portfolio of corporate clients to help with their foreign exchange and risk management needs. Phil has attained FSA approval and has completed the Certificate in International Treasury Management (CertITM).
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