The Eurozone under considerable taxation pressure, just weeks from an important week. It will be the day it is expected to announce its first revision of third-quarter Gross Domestic Product (GDP) figures. The euro is continuing to strengthen against the US dollar, approaching the 1.16 level. This announcement has occurred at an especially critical juncture for the nascent currency. Despite a week lacking major domestic news, the economic landscape in the Eurozone has drawn attention, particularly following slightly disappointing retail sales figures for September.
The forthcoming GDP revision should offer new details of how the Eurozone is faring economically. In particular, analysts and economists are altogether closely monitoring this data with the power to steer market expectations and investor sentiment. The revision will clarify how well the economy has managed challenges over the past months, especially in light of fluctuating energy prices and ongoing geopolitical tensions.
Last week was a good week for the euro, showing some real strength, climbing higher against the US dollar. By the end of the week, it was near that pivotal 1.16 mark, a psychological level that traders tend to focus on. The euro’s strength is a confluence of several factors. Market sentiment and the increasing perception of stability in the Eurozone are critical to this story.
It’s important to understand that the week leading up to all this currency appreciation was incredibly calm. More troubling still, there was little major domestic news to fill that time with. Market participants have certainly focused on macroeconomic data. This unusual spotlight comes from a lack of consequential changes in the area’s near-term political, economic, or fiscal landscape.
While these are all promising signs in terms of currency performance, the newly released retail sales data for September came in well below expectations. This modest underperformance of the single currency economy raises fears for Eurozone consumer confidence. Continued investment in this corridor is critical to maintaining and building upon this economic boom. As such, analysts will be watching very closely to see how this data tracks with the third and final GDP revision coming in a few weeks.