The only notable news yesterday came from the Eurozone, providing the euro a bit of support following concerns last week that falling inflation could put pressure on the European Central Bank to increase stimulus to boost the economy.
German producer price index (a measure of commodity inflation) increased by 0.1% in December and industrial orders in Italy increased by 2.3% in November following a decline of 2.3% in October.
The annual rate of Inflation in New Zealand rose more than expected in the fourth quarter, from 1.4% to 1.6%. A stronger rate of inflation would put pressure on the Reserve Bank of New Zealand to start raising interest rates with many analysts expecting a hike to occur in March.
Today looks set to be as quiet as yesterday with the only notable data on the calendar coming from the Eurozone and Germany in the form of ZEW Survey of economic sentiment. Both sets of data are set to increase to 70.2 and 63.7 respectively.
This should give the euro further support but it’s worth noting that last weeks fall in inflation will continue to put pressure on the ECB to increase stimulus in the form of reducing interest rates; which may well hinder any big gains for the euro.
10.00am – EUR – Eurozone ZEW Survey – Economic Sentiment (Jan): Expected to increase to 70.2.
10.00am – EUR – German ZEW Survey – Economic Sentiment (Jan): Expected to increase to 63.7.