Market sentiment has taken a turn for the worse in the past 12 hours after ratings agency Fitch warned that contagion from Europe’s debt crisis could spread across the Atlantic and have a negative impact on US banks. This reversed some of the earlier optimism gleaned from the Greek government’s latest confidence vote success, and much better than expected US industrial production figures. In October, industrial production increased some 0.7% MoM compared to forecasts predicting only 0.4% growth in the sector.
Yesterday also delivered October’s headline CPI reading for the US, which came out lower than expected at -0.08% MoM, 3.5% YoY (consensus: 0.00% MoM, 3.7% YoY). The recent readings appear to suggest that US inflation is now past its peak (high in September 3.9%), and further falls in the headline reading are expected as food and oil prices are likely to moderate in 2012.
Eurozone CPI came out precisely in line with expectations at 0.3% MoM, 3.0% YoY; a level significantly higher than the ECB’s ideal target of CPI close to but not exceeding 2%. However, given the well-documented problems and uncertainty with the Eurozone coupled with the ECB’s explicitly dovish bias (recall that they unexpectedly cut interest rates to 1.25% at the last meeting), it is doubtful that the absolute level of CPI is a major factor influencing monetary policy right now.
This morning’s data calendar is going to be headlined by the October UK retail sales, where markets are looking for a -0.2% MoM contraction after last month’s 0.6% reading. We will also get the latest Eurozone construction output. The afternoon is peppered with scheduled releases from the US, including housing starts, building permits, jobless claims and the Philadelphia Fed manufacturing index.
By
M.Zohaib Gadit
Forex Trading Consultant
Yesterday also delivered October’s headline CPI reading for the US, which came out lower than expected at -0.08% MoM, 3.5% YoY (consensus: 0.00% MoM, 3.7% YoY). The recent readings appear to suggest that US inflation is now past its peak (high in September 3.9%), and further falls in the headline reading are expected as food and oil prices are likely to moderate in 2012.
Eurozone CPI came out precisely in line with expectations at 0.3% MoM, 3.0% YoY; a level significantly higher than the ECB’s ideal target of CPI close to but not exceeding 2%. However, given the well-documented problems and uncertainty with the Eurozone coupled with the ECB’s explicitly dovish bias (recall that they unexpectedly cut interest rates to 1.25% at the last meeting), it is doubtful that the absolute level of CPI is a major factor influencing monetary policy right now.
This morning’s data calendar is going to be headlined by the October UK retail sales, where markets are looking for a -0.2% MoM contraction after last month’s 0.6% reading. We will also get the latest Eurozone construction output. The afternoon is peppered with scheduled releases from the US, including housing starts, building permits, jobless claims and the Philadelphia Fed manufacturing index.
By
M.Zohaib Gadit
Forex Trading Consultant
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