Euro Area GDP rapidly decreased to 0.2% in the month of September. Q4 economic output continues to be a solid question mark. Reasonable to see the risks of decreasing and negative economic output going forward.
Spain’s Inflation rate seems quite entrenched, in fact, CPI in October rose by 0.3% from negative -0.7%, with the aggregate measures well above 7.0%
France’s CPI and CORE Inflation measures as well increased again in October, that could foresee also higher prices going into the end of Q4.
ECB interest rates benchmarks are consistently way behind CPI and CORE inflation rates in the Euro Area. Withstanding the macroeconomic backdrop the ECB could enter the next year with a monetary framework of 3.0% interest rate compared to structural higher inflation.
Euro Area Euribor forward curves have priced in a 3.0%<3.5% interest rates compared to the Fed Fund rates projected to peak at 5%<5.25% to then steady at 3%. The €uro continues to be overvalued in terms of interest rates differential, U$Dollar rates will be higher than €uro.
According to CFTC data of an outstanding $54,184 Trillion Dollars in FX derivatives, well $52,5 Trillion Dollars are UNCLEARED, which means potentially there are uncleared exposures in currencies and FX derivatives markets.
Euro Area Reserve Assets declined by -€24 billion in October, to €1,11 Trillion Euro. While Euro Area Foreign Exchange reserves amount only to $85,38 billion dollar.