Yesterday saw a quiet day in the Eurozone, nevertheless, the data that was released was generally negative. German factory orders and Spanish industrial production both came out worse than expected, the Eurozone retail Purchasing Managers Index fell compared to last month’s data, and EU retail sales were mixed. A short-term French bond sale produced gilts with a negative yield – showing that investors have both a negative outlook on EU inflation and assets in general.
Today sees German Industrial Production and Trade Balance figures, the French Government Budget and Trade Balance and the release of the EU’s ECOFIN meeting notes. However, the overriding focus of the day will be the US election late this evening and early tomorrow morning. A victory for Hilary Clinton (the marginally more likely winning candidate) would most likely see investors flock to buy US assets (be they Equities, Corporate Debt, Treasuries) which should see the dollar strengthen against other currencies, including the euro. A Trump victory in the short-term would likely see the opposite, with demand for ‘safe-haven’ assets (gold, Japanese yen or the Swiss franc) increasing, but also other assets – which would create upward pressure on the euro against the dollar. Whatever the result, we should expect a busy day for currencies.