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Euro daily update for 27th September 2017


The euro has been falling all week. The euro's current weakness was catalyzed by the rise of the far-right AfD party in German elections. As Merkel will have to form a coalition government with parties such as the Free Democrats and the Greens, this limits her ability to enact EU-wide reforms that French President Macron has been calling for. Yesterday also saw US Federal Reserve Chair Yellen suggest that US interest rates have room to go higher, diminishing the appeal of the euro relative to the US dollar. 

EUR/USD has now fallen below 1.18, and is currently trading closer to 1.1740. After falling sharply at the beginning of the week against the yen, EUR/JPY has been trading sideways. The yen itself is weakening thanks to lower tensions in the Korean Peninsula. The common currency has also been selling off against the pound, with EUR/GBP now trading below 0.88 and closer to 0.8770. 

In economic data, this is a fairly light week. We'll see consumer confidence and inflation expectations data on Thursday. This is followed by flash inflation figures this coming Friday. Last week saw PMI data for both manufacturing and services beat estimates. 


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