In Germany there was a big increase of Factory Orders at 3.3%, what obviously will reflect on the rest German data. But European statistics is still not so impressive. The fall of retail sales turned out to be deeper than expected; it has dropped by 0.6%. Basically this dynamics is quite logical against the background of growing unemployment.
Last year Mario Draghi made his famous announcement, where he expressed the readiness to do everything in order to stabilize situation in the Euro zone. A lot of market participants were concerned, that eventually it could negatively reflect on inflation. Now the situation is the opposite: inflation is declining and approaching critical levels, and here the ECB can start acting in the framework of its mandate.
According to official numbers inflation in Europe by results of September constituted 0.7% in the yearly count. At that in Spain things are even worse: over there inflation dropped to 0.5%. In some segments there was a dip of prices. Anyway the Eurozone is not Japan, which is why deflation risks can carry new crisis features. With a weak economic growth the decline of prices can put peripheral states at verge of default.
Earlier a lot expected that after Bundestag election the ECB would soon start another program of 3 year banks’ crediting, aka LTRO. But October drop of inflation made things bewildering, and now there is a question on the agenda, how regulator will stimulate the real sector of economy. Besides there was a concern, that history would repeat, when banks used those credits to buy obligations of Euro states, rates were going down and governments just didn’t do anything.
At that a lot will depend on words of Draghi on the press conference. To be more precise a lot will depend on the character of inflation: whether this phonomenon is temporary or we see a stable trend. Even if rate downgrade is not going to happen, we still might see further fall of the pair EURUSD. And everybody will be happy, because expensive Euro has caused enough problems to German exporters already.
The Euro has rebounded from the support area at 1.3440-50. If it is able to stay above that level, it will be able to advance further up in the direction of 1.3550. Resistance is at 1.3525-30. Meetings of the ECB and BOE are at focus. Their decisions on interest rates are crucial for the pattern of the pair.
The pair is under some pressure below resistance at 98.80. A break above it could push the pair up. Otherwise a break below 98.4 can weaken it, dragging the pair to 97.80 and subsequently further down.
The Pound is currently in the phase of correction. Thus temporary weakness could push it to 1.6060 and perhaps even lower if the latter line is broken on the downside.
00:30 AUD Employment Change
00:30 AUD Full Employment Change
00:30 AUD Unemployment Rate
06:45 CHF SECO Consumer Climate
09:50 EUR Spanish 10-Year Obligacion Auction
11:00 BRL Brazilian CPI (YoY)
11:00 EUR German Industrial Production (MoM)
12:00 GBP BoE QE Total
12:00 GBP Interest Rate Decision
12:45 EUR Interest Rate Decision
13:30 EUR ECB Press Conference
13:30 USD Continuing Jobless Claims
13:30 USD GDP (QoQ)
13:30 USD GDP Price Index (QoQ)
13:30 USD Initial Jobless Claims
13:30 USD Real Consumer Spending
14:00 MXN Mexican CPI (YoY)
18:30 USD FOMC Member Dudley Speaks
18:50 USD FOMC Member Stein Speaks
19:00 EUR ECB President Draghi Speaks