The euro was the main victim of early trading in the foreign exchange markets today as a series of negative data releases cast doubt over the currency’s potential for growth.
Data on Germany’s industrial output was weaker than expected, for example, in part as a result of the increasingly uncertain global trading scene caused by tariff wars.
The knock-on effects of problems like these could be severe. They may cast doubt on the plans of the European Central Bank (ECB), for example, to move economies away from the stimulus packages which they have been used to.
The ECB is believed to be planning to keep interest rates steady for the next few months and into summer at least.
As a result of the developments, the euro went down by 0.3% against the US dollar to $1.1285. This was a particularly worrying drop for traders of the common currency, as it has been operating previously in the $1.12 to $1.15 area for some time, and is now hovering near the lower end of that spectrum.
The dollar index, meanwhile, saw some support. The index, which tracks the dollar’s performance compared to other global currencies, rose 0.3% and reached 95.959.
This week is looking busy for foreign exchange traders, with lots of economic calendar events to stay tuned for.
Today (Tuesday) sees a number of trade balance statistics out of Canada, including November’s import and export data at 1.30pm GMT.
Over the border in the US, the Redbook index for January 4th will be released at 1.55pm GMT. As a sales-weighted view of same-store sales change, this is an indicator of US consumer confidence.
Later in the day, there will be consumer credit change data out of the US for the month of November, which is due at 8pm GMT.
Looking ahead to tomorrow, US President Donald Trump will give a major speech at 2am GMT on the topic of the border between the US and Mexico.
While this speech is not explicitly economic in nature, it could be a market-moving event for the dollar – particularly given that the issue has recently played a role in sustaining the deadlock that led to the government shutdown.
A set of German statistics will be out in the morning. The trade balance for November is expected at 7am GMT. This is expected to rise from €17.3 billion to €18 billion.
Export, import and current account data will be released at the same time.
French consumer confidence information for the month of December will come at 7.45am GMT. This is expected to move from 92 to 90.
Italian unemployment data for November is expected at 9am GMT, with the figure due to move from 10.6% to 10.1%.
The main event of the day, however, will be the Bank of Canada’s interest rate decision, which is due at 3pm GMT. This is expected to remain where it currently is at 1.75%.
The day will be rounded off by a set of minutes from the last US Federal Open Market Committee, which are due out at 7pm GMT.