It’s been a busy start to the week for EUR/USD. The pair lost ground in the Asian session, only to recover in European trade. Currently, EUR/USD is trading at 1.1789, down 0.04% on the day. In economic news, there are no major indicators in the eurozone or the US. German PPI remained unchanged at 0.3%, edging above the estimate of 0.2%. The markets will be keeping an eye on ECB President Mario Draghi, who will testify before the European Parliament Economic and Monetary Affairs Committee. Draghi will be discussing ECB monetary policy, and the markets will be looking for clues regarding future policy moves.
German coalition talks are in crisis, as the Free Democratic Party (FDP) pulled out of talks on Sunday. Christian Lindner, head of the FDP, did not mince words, saying that there was no “basis of trust” to enter a government with Angela Merkel’s CDU-CSU alliance and the Greens. The parties have been holding negotiations for a month, but have failed to bridge the gaps on issues such as immigration. So what’s next? Merkel has said in the past that she will not run a minority government, but if she holds fast to that stance, Germany would likely face another election. Some pundits are predicting that this could be the end of the Merkel era, which could usher in a period of political uncertainty in the largest economy in the eurozone.
US indicators ended the week on a high note, as housing data easily beat expectations. Building Permits for single-family homes jumped to 1.30 million, above the estimate of 1.25 million. The annualized pace of 839,000 building permits in October was the fastest since September 2007. Housing Start also sparkled, accelerating to 1.29 million, compared to an estimate of 1.19 million. The catalyst for the strong numbers were hurricanes Harvey and Irma, which caused massive damage in the southern part of the US. With rebuilding efforts well underway, construction numbers should remain strong in the fourth quarter.
