Risk sentiment has taken a turn for the worse overnight, in spite of an absence of much significant news. EURUSD has tumbled to a fresh 5-week low of 1.3429, while Asian equity indices have all fallen sharply; the Nikkei is -0.9%, Hang Seng -2.3%, and Shanghai Composite -2.5%. Italy’s new Prime Minister Mario Monti is expected to unveil his new cabinet today, but even this political development has failed to sooth investor worries about the long term future of the debt-ridden Eurozone.
Yesterday, Eurozone Q3 GDP came out in line with expectations at 0.2% QoQ, 1.4% YoY, and today we await another major piece of economic data in the form of October’s CPI readings. Analysts are looking for a reading of 0.3% MoM, 3.0% YoY after last month’s 0.8% MoM, 3.0% YoY print; however given the ECB’s decision to cut rates at the last meeting, we doubt that any upside surprise would have a meaningful impact on the euro’s fortunes.
Another highly significant release due out today will be the Bank of England’s quarterly inflation report, a publication given heightened importance after yesterday’s UK CPI figures revealed a second consecutive month of above 5% YoY inflation for the UK. Policymakers within the BoE have repeatedly stated that the prevailing risks to growth are actually likely to lead to an undershoot of the inflation target over the medium term (target CPI rate 2.00%), but that message has been significantly undermined by the reality that we have heard it for almost 2 years now and still watched CPI climb ever since – hitting a peak of 5.2% last month.
In other news, the Bank of Japan left interest rates unchanged at 0.10% overnight, and no new stimulus or unconventional monetary policy actions were announced. This outcome was universally expected, and as such USDJPY has remained locked in a tight range around 77.00, and unlike yesterday evening there have been no unexpected spikes or price moves of interest.
By
M.Zohaib Gadit
Forex Trading Consultant
Yesterday, Eurozone Q3 GDP came out in line with expectations at 0.2% QoQ, 1.4% YoY, and today we await another major piece of economic data in the form of October’s CPI readings. Analysts are looking for a reading of 0.3% MoM, 3.0% YoY after last month’s 0.8% MoM, 3.0% YoY print; however given the ECB’s decision to cut rates at the last meeting, we doubt that any upside surprise would have a meaningful impact on the euro’s fortunes.
Another highly significant release due out today will be the Bank of England’s quarterly inflation report, a publication given heightened importance after yesterday’s UK CPI figures revealed a second consecutive month of above 5% YoY inflation for the UK. Policymakers within the BoE have repeatedly stated that the prevailing risks to growth are actually likely to lead to an undershoot of the inflation target over the medium term (target CPI rate 2.00%), but that message has been significantly undermined by the reality that we have heard it for almost 2 years now and still watched CPI climb ever since – hitting a peak of 5.2% last month.
In other news, the Bank of Japan left interest rates unchanged at 0.10% overnight, and no new stimulus or unconventional monetary policy actions were announced. This outcome was universally expected, and as such USDJPY has remained locked in a tight range around 77.00, and unlike yesterday evening there have been no unexpected spikes or price moves of interest.
By
M.Zohaib Gadit
Forex Trading Consultant
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