Euro area economic growth likely to have slowed in Q3

The euro area third quarter growth data is set to be released this week, along with the preliminary October inflation data. According to a DBS Bank research report, the economic growth is likely to have decelerated to 2 percent on a year-on-year basis. Nominal wages and negotiated wage growth rebounded, even though increased energy prices probably weakened consumption at the margin.

In July and August, retail sales decelerated, hinting that the crucial stimulus from increased consumption eased in the third quarter. Industrial production weakened in spite of better capacity utilization rates. Factoring in weakening lead indicators and global protectionist trade policies, the European Central Bank staff projections for growth were lowered to 2 percent from 2.2 percent year-on-year earlier.

Inflation in October is expected to be around the ECB target at 2.1 percent, driven by strong energy prices, with core rate to have remained stable around 1 percent.

“While QE withdrawal plans remain on the cards, a rate hike from the ECB is unlikely in midst of Italian budgetary worries, Brexit uncertainty and easing growth momentum at home”, added DBS Bank.

At 12:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 49.5756, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 75.1038. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex