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Euro daily update for 13th December 2017


After falling fairly sharply yesterday, the euro is flat this morning. The euro has been particularly weak against the US dollar and the Australian dollar. Yesterday's German ZEW survey results were mixed, with economic sentiment missing expectations while the Current Situation survey was stronger than expectations. This morning, markets will be focused on upcoming industrial production figures to gauge economic growth in the Eurozone. Looking at political news,  Politico is reporting that Germany's SPD is considering a 'grand coalition lite' whereby the party would cooperate with Angela Merkel's CDU/CSU on certain issues only. The proposal to have another 'grand coalition' government is deeply unpopular with many SPD supporters. Our short-term outlook on the euro is neutral, while our medium-term outlook remains bullish.  

The EUR/USD exchange rate is now trading above 1.1730. Looking at EUR/JPY, the pair is down today and is currently trading just above 133.10. The euro is flat against the pound, with EUR/GBP now trading above 0.880. 

This week’s Eurozone events and economic data includes an ECB meeting and German inflation figures. German ZEW survey results were mixed. Economic sentiment was lower than expected (17.4 vs. 18.0 expected) while current situation was higher than expected (89.3 vs. 88.5 expected). Later today, we’ll see German CPI as well as Eurozone industrial production. On Thursday we’ll see German and Eurozone Markit PMIs. More importantly, there is an ECB rate decision and statement scheduled for Thursday. Markets will be focused on the ECB’s statement as rates are widely expected to remain on hold. On Friday, we’ll see German wholesale prices and Eurozone trade balances. Last week, Eurozone Q3 GDP growth beat expectations.


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