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Euro on the up post French election

16th May 2017 Market Update

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🇬🇧 GBP – Inflation is in focus today, with the headline figure forecast to pick up to 2.7% from last month’s figure of 2.3%. This is the first of a hat-trick of important data releases which will give a window into the current picture and also give an indication of future economic prospects. After today’s CPI figure we have tomorrow’s average earnings figure and on Thursday we have retail sales.

🇪🇺 EUR – Continues to bask in optimism, after shaking off uncertainties relating to the French elections. The Eurozone economy is at it’s strongest since the European debt crisis of 2010 and can now take centre stage. German ZEW Economic Sentiment is expected to hit its best levels since August 2015 today, as renewed vigour returns to the single currency bloc.

🇺🇸 USD – After enjoying a prolonged bull run since the turn of the year, the dollar has been struggling the last few weeks. Initially the weakness was linked to Trump’s troubles with negotiating congress but it has since moved to the health of the economy, with recent data releases being lacklustre. Dollar index is now below 99, the index’s lowest since November.

 

Key Announcements

🇬🇧 GBP
9:30am – Inflation Readings.

🇪🇺 EUR
10:00am- GDP q/q, German ZEW Economic Sentiment.

🇺🇸 USD
13:30pm– Building permits.

 

Our View: With the perceived ‘non-event’ of the UK general election a few weeks away, currency markets are extremely calm. Economics seems to have come back into the front seat since French elections were completed. The euro is well positioned to enjoy further tailwinds, as the economy continues to show signs of rude health. It may be in line to strengthen further against the dollar, against which it has been long perceived as undervalued against.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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