European releases overnight: November Forecast Actual
Italian Industrial Production (MoM) +0.3% - 0.9%
Italian Industrial Production (YoY) - 0.1% - 2.4%
U.K. DCLG House Prices (YoY) 10.5% 9.5%
Euro-zone Industrial Production (MoM) - 0.8% - 0.5%
Euro-zone Industrial Production (YoY) +2.8% +2.7% December
U.K. PPI: Input (MoM) +0.8% +0.5%
U.K. PPI: Input (YoY) 10.6% 11.3%
U.K. PPI: Output (MoM) +0.4% +0.5%
U.K. PPI: Output (YoY) +4.7% +5.0%
U.K. numbers were unremarkable but do nothing to suggest that the market’s current bearishness is misplaced. Falling house prices were confirmed while price pressures – in particular the output prices – forebode of greater inflationary pressures to come. High inflation and low growth – a spicy mix that should generate more selling of the Pound.
Yesterday’s European releases were marginally on the negative side with Italian industrial production the big shocker, following the lead of the French and German numbers.
That the Euro-zone number as a whole didn’t display greater weakness is a little surprising though the slight boost against expectations in the MoM number shadowed a downward revision in October and still saw the YoY figure down very slightly from forecast. Inflation is predictably still the main agenda heading for the ECB with both Liebscher and Bonello displaying the ECB-wide concern over both the level of inflation and of the potential impact of secondary inflation with this year’s wage negotiations underway. The Swiss Teflon economy is under the same threat says the SNB chief Roth. They have a greater freedom to hike rates and the chances are high at the next meeting.
U.S. news overnight:
The U.S. was remarkably quiet last night but that didn’t stop the market raising the bearish flag again. The future is still an unknown and it is that which fuels fears. Will the U.S. consumer provide a boost or will they succumb to the same nerves displayed by market players? When will the housing market recover? When will the credit crisis fears subside? All unknowns right now but the cogs will be at work repackaging the crisis to provide a state of calm. Until it explodes once again… The Dollar’s additional push was technically a bit stronger though has failed at key support levels. Having said that, after a rudimentary glance, momentum conditions still look quite bearish.
A pause is possible but a push below the old Dollar lows does look a fairly good wager.
Most data today is inflation related from both Europe and the States which shouldn’t help either bloc. What may be more of interest is the German and Euro-zone ZEW surveys which are expected to slip a little further. Never-the-less, the differential still favors the Euro with the threat of a rate hike now becoming stronger and which should continue to fuel Euro gains. Don’t expect much movement until late in the day…
More later once the daily analysis has been done…
There are no economic releases from Asia due today:
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