The euro has posted slight gains in the Wednesday session. Currently, EUR/USD is trading at 1.1770, up 26% on the day. On the release front, the sole eurozone indicator is Consumer Confidence, which is expected to remain unchanged at -1 point. In the US, it’s a busy day, so we could see some movement from the pair during the North American session. The markets are expecting Core Durable Goods to slow to 0.4%, and unemployment claims to drop to 241 thousand. UoM Consumer Sentiment is forecast to soften to 98.2 points. As well, the Federal Reserve releases the minutes of its November policy meeting. On Thursday, Germany and the Eurozone release manufacturing PMI reports, and Germany will publish final GDP. The ECB will release the summary from its October policy meeting.
The political deadlock continues in Germany, as President Angela Merkel faces her toughest challenge since coming to power 12 years ago. With the Free Democratic Party pulling out of coalition talks on the weekend, Merkel appears unable to form a coalition government. Merkel has said she would rather hold another election than try to govern with a shaky minority government. President Frank-Walter Steinmeier has urged the parties to redouble their efforts in order to reach an agreement, warning that another election would cause uncertainty in German as well as Europe. The crisis in the eurozone’s largest economy could paralyze the European Union, as Merkel has become the unofficial leader of the bloc. Euro-supporters such as French President Emmanuel Macron have ambitious plans to strengthen European integration, but this will have to wait until Merkel can straighten out her domestic challenges.
US housing indicators continue to beat expectations. On Monday, it was the turn of Existing Home Sales, which climbed to a 4-month high. On Friday, Building Permits and Housing Starts impressed the markets. 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 Starts 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.
