EUR: German balance of trade comes in below expectations but still healthy

The main release for the eurozone on Friday was the German balance of trade for October. It was forecast to fall from €24.1 billion to €21.6 billion, but the figure actually came in way below expectations at €18.9 billion. Exports declined by 0.4% when they were forecasted to increase by 1% which was rather surprising.

The euro made some very slight losses against the dollar but it made gains against the pound following the news that trade talks between the UK and EU won’t happen until next year. Sterling had started the day so brightly too.

No major release today, but the German ZEW economic sentiment index will be released on Tuesday. This is a survey of around 300 German businesses and is seen as a leading indicator of the German economy. As the largest economy in the eurozone, the index carries some weight. It will be interesting to see what the survey shows. On Wednesday we will see the inflation rate in Germany and the Markit manufacturing purchasing managers’ index on Thursday. It is expected to increase to 62.5 from 61.9 and when we consider that anything above 50 shows growth, if the forecast proves true then that will be an impressive figure.

Finally, the European Central Bank will make their interest rate decision on Thursday too. They are widely expected to keep it at 0% but the subsequent press conference will be interesting, mainly to see what President Mario Draghi has to say about the future of their quantitative easing programme.