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By xemarketanalysis November 14, 2017 2:08 pm
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    XE Market Analysis: Euro Rises as Economy Sets for Best Growth in a Decade

    OVERVIEW

    • The Pound is under pressure on an inflation undershoot.

    • USD has mixed performance but is generally weaker with a little boost from stronger PPI.

    • The Swedish Krona falls sharply after inflation cools.

    • The Chinese Yuan economic data misses’ expectations, pointing to moderating growth. 

    • Oil prices retreated modestly from last week’s peak but remain firm.

    HIGHLIGHT

    The Eurozone's economies are going through their best growth period since the financial market crisis with annual GDP rising 2.5% in the third quarter. Germany was a major factor, but countries such as Italy showed signs of revival as global demand and the ECB's monetary policy stance drive increased economic activity.

    US DOLLAR

    The US Dollar is soft again today with doubts about tax reform appearing to be the main catalyst with stronger than expected producer price inflation data doing little to stem the currency's losses. Fed President, James Bullard, said the Fed should keep interest rates on hold due to inflation that has headed toward the downside this year. As a non-voting member, his view isn't seen as core to the Fed policy path.

    BRITISH POUND

    The Pound is generally weaker after data showed UK annual consumer price inflation was held at a 5-year high of 3% last month, just shy of market forecasts for a new peak of 3.1%. Today’s data confirmed that some underlying price pressures are easing, with the costs of manufacturers' raw materials rising 4.6% compared to a year previous, down from 8.1% in September. The Pound fell sharply following the data as it reinforced market expectations that the recent rate hike will be all that is needed for the time being as the impact of the currency's depreciation on imported inflation eases in the months ahead. It has since recovered some ground but is trading near a 3-week low versus the Euro. 

    EURO

    The Euro broke above the 1.1680 resistance level as upbeat economic EZ GDP growth and sentiment from Germany's ZEW institute lifted sentiment towards the single currency (see highlight). 

    CANADIAN DOLLAR

    The Loonie is flat on the session with investors focused on the resumption of NAFTA renegotiations later this week. Uncertainty is likely to keep the Loonie sidelined until talks formally get underway on Friday.

    AUSTRALIAN DOLLAR

    The Aussie Dollar hit a fresh 4-month low as disappointing Chinese data weighed on the currency before recovering slightly thanks to a surprisingly strong survey of business activity. The latest business survey from the NAB showed the best conditions in two decades with sales and profits surging in October.

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