The euro dropped to its lowest level since May 2017 after German inflation data gave plenty to euro traders to be concerned about. Whilst earlier in the session we learnt that German unemployment remained resilient, the same cannot be said of inflation. Headline CPI unexpectedly dropped to 0.9% in September, supporting the ECB decision to ease monetary policy earlier in the month. Investors will now look ahead to eurozone inflation, which could offer some support to the flailing common currency. Analysts are forecasting an increase in core inflation to 1%, up from 0.9%.
The weakness in the euro was offering some support to the DAX, which traded some 0.3% higher across the session.
Pound hovers at $1.23 after annual GDP revised higher
The pound is holding at $1.23 as investors digest the upward revision of UK GDP earlier this morning and the ongoing political drama in Westminster. UK GDP as expected, contracted -0.2% quarter on quarter in the second quarter. However, thanks to an upward revision in the first quarter annual GDP ticked higher to 1.3%, higher than the 1.2% forecast. Whilst the news put a skip in the step of pound traders, the optimism didn’t last. Let’s not forget that the uptick in the first quarter is almost certainly down to stock piling prior to the first Brexit date. Stockpiling is not a sustainable manner to grow an economy.
Brexit headlines have been as mixed an unhelpful as ever. On the one hand Boris and co are saying they are quietly optimistic that a deal can be done, on the other hand rumours are circulating that the PM’s foes could try to get the Queen to fire him. Whilst this could prevent a no deal Brexit, prolonged Brexit uncertainty will also continue to hit the UK economy and the pound.
WeWork (NYSE:WEWK) scraps IPO
WeWork has pulled its IPO rounding off a month of chaos which has done significant damage not only to its apparent value but also its reputation. After a botched attempt to go public, the firm has made the most sensible decision yet – to focus on its core business. Just a month ago it was one of the most hotly anticipate IPO’s and now it serves as a warning to others over investors waning appetite for unproven businesses models.
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