European benchmark indices dragged their heels during the last session of the week after GDP data for both France and Germany showed marginal growth during the third quarter. The data confirmed a moribund outlook for the eurozone despite French Q3 GDP data beating expectations of a 0.1% q/q increase, with the preliminary reading coming in at 0.3% q/q. German Q3 GDP data came in broadly in line with consensus expectations, as the former poster child for the eurozone managed to eke out 0.1% q/q growth, rebounding from the -0.2% decline seen the previous quarter.
With data coming out of Europe still remaining soft we could see a subdued start to the coming week as investors switch focus to the eurozone trade balance as well as US industrial production data on Monday, while meeting minutes released from the Bank of England and the FOMC on Wednesday will offer some potential insight into the timeline for an eventual rates rise and tightening of monetary policy.
The dollar index rallied strongly throughout the session, lifting back above 88.00 after a brief patch of consolidation earlier this week which prevented significant moves on the upside above 87.90. The 0.4% rally in the dollar against its major peers was prompted by the greenback gaining further ground against the yen after market expectations of a snap election in Japan saw the currency weaken towards 116.80 against the dollar, its weakest level so far this year. However, these early gains were quickly sold off as investors took an opportunity to bank short term profits. Contrasting fortunes between the US and the eurozone and Chinese economies have seen support for the US dollar build in recent sessions, adding 10.0% against a basket of major peers since the beginning of the year with the dollar index set to post gains for a fourth consecutive week.