European FX Outlook: Germany and its hottest climate in Europe

What you need to know before markets open:

German economic indicators continue to report very optimistic results, confirming that the Europe’s largest economy progresses even without the government full steam ahead.

Friday’s market moving events

• German Ifo business climate indicator is expected to decelerate slightly to 116.6 in November.
• The US manufacturing PMI is expected to rise to 54.8 in November while services PMI is set to rise to 55.5.
• ECB’s Vice President Constancio is scheduled to speak at the occasion of the awarding of the Germán Bernácer Prize organised by Banco de España in Madrid at 12:30 GMT.
• ECB’s Benoît Cœuré is scheduled to speak at the conference “Economic and Financial Regulation in the Era of Big Data" organised by Banque de France in Paris at 18:15 GMT.

Major forex market movers
While majors gained against the US Dollar, global stocks are heading into the final weeks of 2017 at record highs with the economic growth accelerating and earnings’ rising.

Thursday’s macro summary

• German GDP confirmed a preliminary reading of 0.8% q/q growth in Q3.
• French manufacturing PMI surprised on the upside rising to 57.5 in November while services rose to 60.2 pushing the composite PMI to 78-months high.
• German manufacturing PMI rose to 81-months high of 62.5 in November while services PMI rose to 54.9.
• The Eurozone manufacturing PMI rose to the highest level in 211 months at 60.0 in November while services rose to 56.2, its highest in 6-months.
• The UK Q3 GDP was confirmed at 0.4% q/q while business investment decelerated to 0.2% q/q.
• Minutes of November ECB meeting show broad support for taper decision but controversy on whether or not QE extension should be open-ended.
• ECB’s Villeroy said the UK banks cannot expect to gain EU passport without accepting single market rules. All parties should, as of now, undertake preparations to avoid “cliff edge” risk from Brexit. ECB is still not meeting the inflation target, so it must maintain ample degree of stimulus.
• German Social Democrats are under pressure to form grand coalition.
• Canada’s retail sales rose 0.1% m/m falling short of expectations in September while core retail sales fell -0.3% m/m from revised -0.8% m/m in August.