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Focus returns to economic data (video)

Currencies Direct February 23rd 2015 - 2 minute read

A Greek deal looks to be almost agreed, so market focus will return to economic data over the coming days. Preliminary inflation data from the Eurozone is expected to show no meaningful uptick in prices with the aggregate year-on-year headline rate across the Eurozone forecast to remain in deflationary territory at -0.6%.

German Consumer Price Index data should be slightly above the overall number with the periphery seeing larger falls in prices than the European core. The ECB bond-buying programme is scheduled to begin in March. It is hoped the scheme will begin to push price increases back towards the ECB target of around 2%. Data today on German business climate is expected to be positive and consistent with a slow improvement in economic conditions across the European core. Combined, this data should help support the euro in trading this week.
 
US inflation data is also expected to turn negative driven by falls in the price of oil. Meanwhile, core inflation, with food and energy prices removed, remains low and stable. The Federal Reserve minutes last week showed that Chair Janet Yellen remains in no rush to move rates and any decision will be data driven. Durable goods orders are expected to show a small improvement in January and the overall data flow this week should be mildly dollar positive.
 
UK data is very light this week. GDP data is expected to be as forecast with 0.5% in Q4 — a slight slowdown from growth earlier in the year but still a solid number. Recent momentum in the pound, especially against the dollar, looks to be running out of steam. The risks remain to the downside should consumer confidence, due later in the week, not maintain the recent uptick in data flow for the UK.

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