Chief economists at PWC have put this slump in form down to the uncertainty surrounding Brexit during the autumn which forced businesses to remain cautious until the outlook cleared. Furthermore, UK output shrank by a worrying 0.3% in November which may well act as a precursor to the next line of economic releases in the early stages of this year.

Bundesbank Release Positive Economic Outlook for the Eurozone

The euro got off to a positive start to the week with positive economic figures from powerhouse Germany and much needed political progress in France providing some much needed support to the single currency.

Interestingly, the German Government posted a record surplus in 2019, despite the worrying signs of recession throughout 2019. The €17.1 Bn fund marks the highest levels since the reunification in 1990 and may well provide support for the euro in the year ahead, with extra funding available to help stimulate the economy.

To add to this, Bundesbank have now revealed they are expecting eurozone growth at 1.6% for 2022, a significant increase from last years revised levels following numerous months of concern as a result of the ongoing US-China trade war. The long-term trend for the euro makes for positive reading.

Looking at the immediate future, those holding the single currency would have been pleased to hear the French PM (Eduard Philippe)has offered concessions to the unions over pensions after 5 weeks of protesting, with a plan to revise the retirement age back down to 64 years should certain conditions are met. It will be interesting to see how the unions respond.

With the US Chamber of Commerce confirming only yesterday that progress in “Phase one trade deal only stops the bleeding” the global markets remain far from being out of the woods as another cycle of uncertainty from talks with China may well resurface.

Chinese Imports Data Could Provide Uplift for AUD

This morning’s key trade data from Australia’s leading trading partner may well provide a lift for AUD exchange rates with a pick up in Chinese imports filling investors with confidence for a stable economic relationship in the months ahead.

Furthermore, S&P Global ratings have confirmed Australia will maintain its AAA status despite the projected cost of the ongoing bushfires amounting to A$5 Billion or a drop of up to 0.5% in Australia’s Annual GDP target, according to Westpac.

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