American FX Outlook: It’s all about PPI and US taxes today

What you need to know

  • The US dollar is mixed against the majors.  
  • The Eurozone GDP growth reached solid 0.6% q/q while rising 2.5% y/y with Germany strongly supporting the growth.
  • The ECB communication conference headlining world’s major central bankers is not getting much market attention.
  • The US tax reform is overshadowing monetary policy at the moment the House possibly moving toward a vote later this week.

Tuesday’s market moving events

  • Fed´s Janet Yellen, ECB's Mario Draghi, BoJ's Haruhiko Kuroda and BoE's Mark Carney are set to speak at the panel discussion titled “At the heart of policy: challenges and opportunities of central bank communication” at the Central Bank Communications Conference hosted by the ECB, in Frankfurt started at 10:00 GMT.
  • The US producer price index (PPI) is expected to rise 0.1% m/m while rising 2.4% y/y in October.
  • The Bank of England MPC member Jon Cunliffe is speaking at the Oxford Economics Society at 17:30 GMT.

Major market movers

  • EUR/USD is the winner of the day after very solid GDP growth in Germany and the Eurozone.
  • The US Dollar is mixed on Tuesday losing steam against EUR while Brexit related risks weigh on GBP.

Earlier in Asia/Europe

  • German Q3 GDP rose 0.8% q/q while rising 2.3% y/y, coming in better than expected.
  • German CPI decelerated to 1.6% y/y in October.
  • Chicago Fed president Charles Evans said that for any new policies to succeed, Fed must deliver on current 2% inflation target. Evans also called for new policy approach to deal with future bouts of zero interest rates with price-level targeting may be a good way to go, but needs more study.
  • Italy’s Q3 GDP increased 1.8% y/y compared to 1.5% y/y in Q2.
  • ECB's Daniele Nouy said the clock is ticking for banks looking to leave the UK after Brexit, and the affected banks have to move quickly.
  • Dallas Fed president Robert Kaplan said for the Financial Times that he is “actively considering” December rate hike.
  • The UK CPI remained flat on a monthly basis while rising 3.0% y/y in October, falling short of market expectations and pairing the peak from April 2012. That means that the BoE Governor Mark Carney does not have to write a letter to the Chancellor to explain the overshoot, which is not more than one percentage point.
  • The Eurozone GDP rose 0.6% q/q while rising 2.5% y/y in Q3.
  • German ZEW investors sentiment rose to 18.7 in November compared to 17.6 in the previous month.
  • The Eurozone industrial production fell -0.6% m/m while rising 3.3% y/y in September.
  • The ECB communication conference hosting central banking superstars like ECB president Draghi, Federal Reserve chair Yellen, BoE Governor Carney, and BoJ Governor Kuroda is not getting much market response.
     

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