News from Europe: December Forecast Actual
French CPI (MoM) +0.3% +0.4%
French CPI (YoY) +2.5% +2.6% Same old story – higher oil and food prices… but telling is that the YoY figure is the highest since May 2004. Core inflation with out food & energy is still pretty well anchored at +0.2% MoM and +1.8% YoY. It places another nail in the interest rate coffin with Trichet holding the hammer firmly and gritting his teeth with each strike… The odds rise for a hike at the next ECB meeting.
The following economic releases are due today:
November
U.S. Business Inventories +0.4% December
Italian CPI (MoM) +0.3%
Italian CPI (YoY) +2.6%
U.K. CPI (MoM) +0.5%
U.K. CPI (YoY) +2.0%
U.K. CPI Core (YoY) +1.5%
U.K. RPI (MoM) +0.6%
U.K. RPI (YoY) +4.0%
U.S. PPI (MoM) +0.2%
U.S. PPI (YoY) +7.4%
U.S. PPI excl food & energy (MoM) +0.2%
U.S. PPI excl food & energy (YoY) +2.0%
U.S. Advance Retail Sales (MoM) +0.1%
U.S. Retail Sales less autos (MoM) +0.1% January
German ZEW Survey: Econ Sentiment - 40.0
German ZEW Survey: Current Situation +59.5
German ZEW Survey: Econ Sentiment - 38.0
U.S. Empire State Manufacturing 9.8
There is an array of data out today, the vast majority being inflation related from both Europe and the States. High oil prices remain the key to the picture here but should produce limited reaction while actual releases are close to forecasts.
U.S. December retail sales are going to be scrutinized for signs of whether the consumer has been rattled by the higher costs, especially with regard to gasoline prices. Any sign that confidence is on the wane will be Dollar negative and open the way for a further shift lower. From the European side the bigger impact numbers are the ZEW surveys from Germany and the Euro-zone in general. This past month has seen a distinct deterioration in performance numbers, most notably industrial production. Further edging lower of the indexes are expected. What the central bank will be seeking is an erosion of consumer confidence which, as is the threat to the States, would in turn hit business and cause a stronger return to soft numbers. The market remains bearish for the Dollar and is likely to remain that way until proven incorrect. It expects the Fed to cut rates again in two weeks time at the next FOMC and by 0.50%. Equally the expectations are for the ECB to hike rates, possibly at the next meeting to 4.25% to leave Euro rates one-half percent above Dollar interest rates. This will keep the Dollar on the back foot for some while to come… It’ll take a massive turn round in U.S. fortunes for the Dollar to recover right now…
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 108.80-16 1.4966-74 1.1003-38 1.9666-86
Res: 108.32-53 1.4880-13 1.0940-75 1.9602-31 Spt: 107.04-21 1.4810-20 1.0862-83 1.9520-50
Spt: 106.46-70 1.4630-60 1.0806-36 1.9406-18 | 
