German inflation, retail sales data miss their mark
Foreign exchange markets were largely quiet on Thursday, in part due to the Thanksgiving holiday in the US.
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UR/USD has spent the whole week so far stuck in an extraordinarily tight range. The limited economic news that we have received so far this week has not had too much of an impact on the currency markets. Thursday’s German inflation numbers were a disappointment, with the headline year-on-year number coming in unchanged at 1.1% in November after investors had pencilled in 1.3%. This does not bode particularly well for today’s Euro Area wide number.

This morning’s retail sales figures out of Germany were also fairly dire, suggesting that any sort of recovery in Europe’s largest economy is likely to be a very gradual one. Sales declined by 1.9% on the previous month in October, the largest drop in the measure in almost a year. This paints a pretty bleak picture which, if persists, will likely encourage policymakers at the European Central Bank to begin considering the need for an increase in the bank’s QE programme in the not too distant future.

Figure 1: German Retail Sales (2012 - 2019)

Source: Refinitiv Datastream Date: 29/11/2019
As mentioned, the latest Eurozone inflation numbers for November will be out this morning, as will the October unemployment rate. Barring any significant surprises here, Friday could be another relatively quiet one for the EUR/USD pair, particularly given many Americans tend to turn the Thanksgiving holiday into a long weekend.

Sterling eases back amid investor profit taking



Newswires in the UK were also relatively quiet yesterday, aside from the usual headlines surrounding the ongoing campaigning process.

Another poll released from SavantaComRes showed just a 7% advantage for the Tory Party, the joint second lowest lead Johnson has enjoyed since mid-October. While this may be the reason for at least some of the retracement witnessed in the pound yesterday, it may merely be a result of investor profit taking following the near one percent upward move witnessed in sterling on Wednesday.

With Boris Johnson declining the chance to debate with other leaders on the topic of climate change yesterday, the next big TV debate between the two main leaders will be aired on the BBC on Friday 6th December.

Chilean peso slumps to new record low



The biggest news story in the FX world has probably come out of Chile in the past few days. The Chilean peso continues to take a tumble, falling to a fresh record low above the 800 level to the dollar amid a continuation of the political chaos that has rocked the country in the past month.

Large-scale protests, primarily centered around rising costs of living and high levels of inequality, were triggered by a relatively small subway fare hike in October. This has led to widespread violence and placed a significant risk premium on CLP. Intervention from the central bank appears on the way, although it would take something significant to reverse even some of the currency’s 13% slide since the beginning of November.
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