Euro Loses Ground After Eurozone CPI Report, G20 Summit in Focus

Market Reviews

The US dollar strengthened slightly, as markets are awaiting the outcome of negotiations between the leaders of the two largest economies in the world this weekend, which could determine whether trade tensions between them would escalate further. It is expected that US President Donald Trump and Chinese President Xi Jinping will meet at the G20 summit in Buenos Aires, which will start on Friday, discussing controversial trade issues.

The euro weakened slightly, as investors are cautious on the eve of the start of the G20 summit in Argentina. The single currency was also influenced by weaker than expected inflation and employment data. Eurozone headline CPI dropped to 2.0% yoy in November, down from 2.2% yoy. CPI core slowed to 1.0% yoy, down from 1.1% yoy. Eurozone unemployment rate was unchanged at 8.1% in October, missed expectation of 8.0%.

On stock markets, FTSE fell 0.59%, DAX dropped 0.38%, CAC lost 0.20%. Earlier in Asia, Nikkei added 0.40%, Hong Kong HSI gained 0.21%, China Shanghai SSE rose 0.81%, Singapore Strait Times increased 0.26%.

German 10 year yield is down -0.012 at 0.312. Italian 10 year yield is down -0.002 at 3.199. Spread remains below 300.

It was reported today, that Italy’s Prime Minister Giuseppe Conte and Economy Minister Giovanni Tria are working on a proposal to lower 2019 budget deficit target from 2.4% of GBP to 2.0%.

Today’s data also showed, that Canadian GDP dropped -0.1% mom in September, below expectation of 0.1% mom rise. IPPI rose 0.2% mom in October while RMPI dropped -2.4% mom. Swiss KOF economic barometer dropped to 99.1 in November, down from 100.2 and missed expectation 99.8.