Following the October meeting of the European Central Bank, the European Commission published this week the eurozone growth forecast and more.
Autumn European Economic Forecast includes data on gross domestic product (GDP) growth, inflation, employment and amongst others.
GDP Growth is expected at 2,2%, higher than expected in spring (1,7%). The EU economy growth forecast is set to for 2,3% this year (up from 1,9% in spring).
These data are the results of Eurozona 2017 good performances: propelled by resilient private consumption, stronger growth around the world, and falling unemployment. The Unemployment rate (9,1%) is the lowest level since 2009 and inflation is expected to average 1,5% in the euro area this year and 1,4% in 2018 before climbing up to 1,6% in 2019.
The euro dollar exchange ended the week just slightly up, after it started with a downward trend, which led to a new minimum of 3 months. The crucial area reached by EUR / USD in the weekend was below 1,1680.
The euro benefited from a mild risk-off move in global markets and from the strength of other major currencies against the US dollar.
US dollar, on the other hand, performed poorly also due to the proposal on tax reform. The Senate has revealed that it wants to delay corporate tax cuts by 2019 to mitigate the fiscal effects that a tax cut might have on the economy. Next week there will be the vote on this issue.
To the weakening of the dollar also contributed the Non Farm Payroll data rising from 229.000 to 239.000. Analyst expectations was an increase of 231.000 requests.
Unemployment claims continued to show an increase of 1.901 thousand while in the previous survey they settled to 1.884 thousand. The average of four-week unemployment allowance claims amounted to 231,25 thousand, while the last survey recorded 232,50 thousand.
Also GBP benefited from the weakness of the US dollar. The British currency closed up against the dollar but down against the euro. Pressures on currency always come from the Brexit negotiations that have recently focused on the divorce of payments.
There was no big volatility on the markets this week, which may be considering the data for next week. Eurozone and US inflation will be the news that will receive the highest attention from traders.
European inflation could fluctuate the EUR/USD cross if the data will be different from analysts’ forecasts.
The days before the Eurozone inflation figures (on Thursday) will be published, respectively, data on GDP (on Tuesday) and trade balance (on Wednesday).
Another data not to be underestimated for the dollar, in addition to US inflation, is that of US retail sales on a monthly basis.
Last but not least, we are reporting this week’s surprise news, that is, China opening up to international markets by eliminating restrictions on banks’ control imposed on foreign investors.
This move will allow foreign investors to thrust on Asian markets, but will make the country more competitive from an international point of view.