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USD may slide on US CPI figures, Eurozone factory output expected to slow

business-articlesUSD may slide on US CPI figures, Eurozone factory output expected to slow
  • EUR may dip on production data
  • US inflation figures may dent Fed hike bets
  • US retail sales expected to cool
Eurozone factory production set to ease

The euro may find its recent advance slowed this morning as the Eurozone’s industrial production figures are forecast to have cooled in December.

The data is expected to reveal that factory output growth eased from 1% to 0.2% in December, largely attributed to a sharp drop in German production.

However the annualised figures are likely to be more supportive of EUR as they are expected to show that year-on-year growth rose from 3.2% to 4.2%, further reinforcing the bloc’s stellar performance in 2017.

USD poised to fall on CPI figures

The US dollar looks set to tumble this afternoon as the latest consumer price index is published.

Economists forecast the index will show that headline inflation slid from 2.1% to 1.9% in January, reaching its lowest levels since August last year.

Core inflation is not expected to have fared much better either and is predicted to have dipped from 1.8% to 1.7%.

The slide in inflation is likely to place considerable pressure on USD as it could frustrate the Federal Reserve’s plans to accelerate the pace of monetary tightening this year.

However some analysts suggest inflation may prove to be a little more resilient than markets predict, with the recent surge in oil prices possibly offsetting slowing price growth in other sectors.

US retail sales expected to slow

Possibly compounding USD losses this afternoon will the publication of the latest US retail sales figures, with sales expected to have eased at the start of the year.

Current forecasts suggest that sales growth will have slowed from 0.4% to 0.2%  as retail activity continues to cool after striking a two-year high in September.

This would also see sales growth fall below the long-term average of 0.36% and would likely be driven by consumers curbing their spending after splurging in November and December.

Some economists are a little more optimistic however, pointing to high consumer confidence, low unemployment and growing wages as reasons for sales to remain more robust.

Upcoming Data

Wednesday, 14 February, 2018
10:00                     EUR Industrial Production
13:30                     USD Consumer Price Index  
13:30                     USD Retail Sales
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now overseas all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FSA approval and has completed the Certificate in International Treasury Management (CertiTM)

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