- German CPI (MoM) + German PPI (MoM) (Ger, 07:00 GMT)
- French CPI (MoM) (Fra, 07:45 GMT)
- Claimant Count Change + MPC Meeting Minutes (GB, 09:30 GMT)
- German 10-Year Bund Auction (Ger, 10:30 GMT)
- Building Permits + Core PPI (MoM) + Housing Starts (U.S, 13:30 GMT)
- FOMC Meeting Minutes (U.S, 19:00 GMT)
As President Barack Obama enters his second term, the bond market is telling him that the administration’s forecasts for economic growth over the next four years are too optimistic. The Office of Management and Budget predicts yields on 10- year Treasury notes will rise to average 4.1 percent in 2015, and 4.9 percent in 2017 as the economy expands at approximately a 4 percent rate in the second half of the President’s term. Bond prices suggest the yield, now at about 2 percent, will average below 3 percent two years from now, implying that gross domestic product will fall short of OMB projections according to data compiled by Bloomberg.
The Bank of Japan will implement unprecedented monetary stimulus this year, board member Yoshihisa Morimoto said, in comments that suggest he may think enough is being done to end deflation and revive growth. “This year, we will be implementing unprecedentedly large monetary easing,” Morimoto said today in a speech in Kochi, southern Japan. Japan’s monetary base is the highest among advanced countries at 27 percent of nominal gross domestic product, he said. Moreover, Japan’s trade deficit swelled to a record 1.63 trillion yen ($17.4 billion), on energy imports and a weaker yen, highlighting one cost of Prime Minister Shinzo Abe’s policies that are driving down the currency. Exports climbed 6.4 percent in January from a year earlier, the first rise in eight months, exceeding the median 5.6 percent estimate in a Bloomberg News survey of 24 economists. Imports increased by 7.3 percent, the Finance Ministry said in Tokyo today.
Greek labor unions are holding their first general strike this year as Prime Minister Antonis Samaras’s coalition government implements a new round of austerity measures amid record unemployment. Schools, ferries, trains and government services will shut down today, with protests planned in central Athens by the country’s public and private-sector trade unions. Greek civil aviation workers will hold an eight-hour walkout that is set to cause delays and cancellations at the country’s airports. Elsewhere, Spanish banks will still face funding and liquidity pressures in the coming months, even though some were able tap bond markets earlier this year, Moody’s Investors Service said.
EUR/USD: The EUR/USD pair traded higher yesterday, after data showed investor confidence in Germany, the region’s biggest economy, jumping to a three-year high. Today, the pair was trading slightly lower at 1.34057 as investors jumped on the sidelines ahead of the German CPI (MoM) (Forecast: unchanged at -0.5%), the German PPI (MoM) (Forecast: 0.3% - Previous: -0.3%), the French CPI (MoM) (Forecast: -0.2% - Previous: 0.3%), the French Business Survey (Forecast: 87 – Previous: 86), the German 10-Year Bund Auction and the Consumer Confidence in the eurozone. The European Commission will probably say today that its index of consumer confidence improved to minus 23.2 this month from minus 23.9 in January, according to the median estimate of economists surveyed by Bloomberg News. All these data will bring volatility on the pair on the European session. Later in the day, the U.S will release the Building Permits (Forecast: 0.915M – Previous: 0.909M), the Core PPI (MoM) (Forecast: 0.2% - Previous: 0.1%) and the Housing Starts (Forecast: 0.925M – Previous: 0.954M). The U.S will also release the FOMC Meeting Minutes. The minutes offer detailed insights regarding the FOMC's stance on monetary policy, traders will carefully examine them for clues regarding the outcome of future interest rate decisions. Investors should remain prudent on the pair; a wait-and-see approach is a recommended strategy. The resistance level is at 1.34553 and the support level is at 1.33238.
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GBP/USD: The GBP/USD was trading higher at 1.54349 at the time of writing, ahead of some important data in the U.K. today: the Claimant Count Change (Forecast: -5.0K – Previous: -12.1K) and the MPC Meeting Minutes. The MPC Minutes are a detailed record of the Bank of England's policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates. Later in the day, the U.S will release the Building Permits (Forecast: 0.915M – Previous: 0.909M), the Core PPI (MoM) (Forecast: 0.2% - Previous: 0.1%) and the Housing Starts (Forecast: 0.925M – Previous: 0.954M). The U.S will also release the FOMC Meeting Minutes. The minutes offer detailed insights regarding the FOMC's stance on monetary policy, traders will carefully examine them for clues regarding the outcome of future interest rate decisions. However, Investors should remain prudent on the pair as concerns over the economic outlook and the U.K. risk will continue to weigh on the pair. Yet again, a wait-and-see approach will be a good strategy. The resistance level is at 1.55035 and the support level is at 1.53953.
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WTI (Oil): At the time of writing, Oil was trading higher at 96.775 after Enterprise Products Partners LP said oil flowing through the Seaway pipeline will climb, helping reduce a glut in the U.S. Midwest, and after the newly released German economic sentiment was better than expected. Trading seems a bit sticky in the Asia session, as investors are waiting for some news and data for some visibility. Data today may show that last week, crude supplies probably gained 2 million to 374 million barrels, according to the median estimate of nine analysts in a Bloomberg survey. It will be the longest streak of gains since May. The amount of oil in storage for the week ending Feb. 8 is about 11 percent higher than the five-year average for the period, according to data compiled by Bloomberg. Elsewhere, expectations for waning Middle East tensions may weigh in on sentiment. Investors should stay cautious on the commodity. The resistance level is at 97.450 and the support level is at 95.211.