EUR/USD has posted considerable gains in the Wednesday session. Currently, the pair is trading at 1.1494, up 0.59% on the day. On the release front, German industrial production posted a gain of 0.2%, above the estimate of 0.0%. Eurozone retail sales improved to 0.0%, shy of the estimate of 0.1%. There are no major releases out of the United States. On Thursday, Germany releases trade balance and the eurozone publishes its economic forecasts. In the U.S, the Federal Reserve will release a rate statement. We’ll also get a look at unemployment claims.
It’s been a positive week for German manufacturing data. On Wednesday, industrial production ended a nasty streak of three straight declines, with a modest gain of 0.2%. A day earlier, factory production rebounded with a gain of 0.3%, beating the forecast of -0.4%. The eurozone economy slowed down in the third quarter to 1.7%, compared to 2.2% in the second quarter. If the economy is to rebound in Q4, Germany, the locomotive of the eurozone, will have to lead the way with stronger data.
Participation was high in the mid-term elections on Tuesday, and voters rendered a split-decision. The Democrats regained control of the House of Representatives for the first time since 2010, but the Republicans maintained control of the Senate, and have increased their majority. The results are a setback for President Trump, as the Democrats will be in a stronger position to derail Trump’s plans to boost fiscal stimulus and lower taxes. Investors have reacted on Wednesday by sending the dollar lower. The euro faces its next major test on Thursday, when the Federal Reserve releases its monthly rate statement. The Fed is expected to maintain the benchmark rate at a range of between 2.0% and 2.25%.
