There has been little respite for the Euro in the past 48 hours, with the EUR/USD cross at one point in today’s trading session falling to as low as 1.143 – a level not seen since 20th August – before bouncing back to 1.148. In trade-weighted terms the Euro has now weakened about 1.6% in the past fortnight alone to its lowest level since 21 August .
There has arguably been no disastrous event for the Euro but the combination of market worries about the 2019 Italian budget deficit and Brexit negotiations, weak Eurozone inflation and soft German growth numbers has weighed on the single currency. The German trade surplus rose to EUR 18.3bn in August but this was mostly due to the 2.7% mom fall in imports outweighing the 0.1% contraction in exports.
This points to a slowdown in German trade and comes hot on the heels of data showing that German industrial output contracted 0.3% in August – the third consecutive monthly fall in output for the Eurozone largest economy. The Euro can’t seem to catch a break at the moment but the European Central Bank is unlikely to be overly worried. If anything a weaker and more competitive Euro would help the ECB’s cause in trying to drive Eurozone growth and inflation.
