Daily Market Report – 18/02/2015

GBP
British consumer price inflation eased last month to its lowest level since
records began in 1989 and looks set to slow further, lifting voters’ disposable
incomes as national elections approach. Annual CPI fell to 0.3 percent in
January, Tuesday’s official figures showed, down from 0.5 percent in December.

The fall largely reflected a slide in oil prices, which last month hit a near
six-year low below $45 a barrel, as well as lower food costs. Finance minister

GBP
British consumer price inflation eased last month to its lowest level since
records began in 1989 and looks set to slow further, lifting voters’ disposable
incomes as national elections approach. Annual CPI fell to 0.3 percent in
January, Tuesday’s official figures showed, down from 0.5 percent in December.

The fall largely reflected a slide in oil prices, which last month hit a near
six-year low below $45 a barrel, as well as lower food costs. Finance minister
George Osborne welcomed the figures, published less than three months before
the election, as boosting households’ spending power after years of weak wage
growth.

Economists expect data on Wednesday to show wages rose 1.8 percent in the three
months to December, which would be the fourth straight month of above-inflation
increases. CPI models for periods before official estimates were produced
showed inflation was last lower in 1960.

Easing inflation could delay a first Bank of England interest rate rise since
the financial crisis, though for that to happen the price falls would have to
spread beyond food and energy and show signs of becoming self-reinforcing.Stripping
out energy and food, prices rose last month by 1.4 percent, a three-month high.

Food and non-alcoholic drink prices, pushed down by a supermarket price war and
low commodity prices, fell 2.5 percent, the biggest drop on record. Last week,
BoE Governor Mark Carney said inflation would probably soon fall below zero due
to tumbling oil prices, but the Bank also forecast a rebound to its 2 percent
inflation target in about two years’ time.

EUR
German investor confidence rose to the highest level in a year in February,
buoyed by the imminent arrival of fresh central-bank stimulus. The ZEW Center
for European Economic Research in Mannheim said on Tuesday that its index of
investor and analyst expectations, which aims to predict economic developments
six months in advance, climbed to 53.0 from 48.4 in January. Economists had
forecast an increase to 55.0. 

Growth accelerated at the end of last year in Germany, the region’s largest
economy, helping the rest of the currency bloc to better-than-forecast output.
With oil prices and the euro sinking, and the European Central Bank scheduled
to start quantitative easing next month, investors have stayed upbeat even as
the mounting risk of a crisis in Greece threatens renewed turmoil. 

A gauge of the current situation climbed to 45.5 in February from 22.4 the
previous month, ZEW said. A measure of expectations for the euro area rose to
52.7 from 45.2. The survey of 227 analysts was conducted from Feb. 2 to Feb.
16. 

The outlook for the Euro-zone remains clouded by the intensification of the
Ukraine crisis and the “collision course” of Greece’s new government, ZEW
President Clemens Fuest said in the report. Even so, ZEW economist Michael
Schroeder said German investors are relatively relaxed on Greece. 

Key
Announcements:
GBP- 09:30 :Bank of England Meeting Minutes
GBP- 09:30 :Unemployment claimant count change (Jan) expected to rise
to -25K from -29K
GBP- 09:30 :UK ILO Unemployment Rate 3M Dec expected to remain unchanged
at 5.8%
USD- 14:15 :US Industrial Production expected to rise to 0.3%
from -0.1% 

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