EUR/USD is showing little activity on Friday, as the pair continues to trade in the mid-1.26 range. The listless euro didn’t show any reaction as German Consumer Climate improved to 8.4 points. In the US, today’s sole release is New Home Sales. The markets are expecting the indicator to soften this month, with an estimate of 473 thousand.
The week wrapped up on a high note in Germany, as GfK Consumer Climate rose to 8.4 points, up from 8.3 a month earlier. This easily beat the estimate of 8.1 points. Consumer confidence is crucial for stronger economic growth, and the weak Eurozone is very dependent on Germany, the largest economy in the Eurozone. Earlier this week, the Deutsche Bundesbank issued its monthly report. The German central bank said that the German economy showed little growth in the third quarter, as manufacturing production fell and business confidence weakened. At the same time, employment numbers and consumer spending were higher, so GDP was likely to remain unchanged. As for Q4, the report stated that the outlook is “moderate”. If the euro is to recover from its sharp losses in the past two months, German data will have to improve.
In the US, jobless claims were softer than expected. Unemployment Claims rose to 284 thousand last week, much higher than the previous reading of 264 thousand, and above the estimate of 269 thousand. However, the markets were not too concerned, as the four-week average, which is less volatile than the weekly release, dipped to 281,000, a 14-year low. Meanwhile, weak inflation levels continue to point to slack in the economy. On Wednesday, this trend continued with soft consumer inflation numbers. CPI rose to +0.1%, an improvement from the previous reading of -0.2%. The estimate stood at 0.0%, so the markets clearly did not have high expectations. It was a similar story from Core CPI, which also posted a 0.1% gain, up from 0.0% a month earlier. This was shy of the forecast of 0.2% but still within expectations.
EUR/USD 1.2651 H: 1.2665 L: 1.2635
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