American FX Outlook: The US core retail sales become key driver on Wednesday

What you need to know before markets open

  • The ECB President Draghi confirmed that the currency strength might be a source of low inflation while promising predictable monetary policy, stressing that ECB still needs to see evidence that inflation dynamics are moving in the right direction before pondering policy changes. Draghi’s comments confirmed ECB’s Lane opinion that the pace of the euro’s move is more important than the level.
  • There are press reports suggesting that the US will soon announce trade sanctions against China.
  • The US retail sales report headlines the day with the control group as the core part of retail sales that are included in GDP being of particular interest.

Wednesday’s market moving events

  • The US retails sales control group is expected to rise 0.4% m/m in February after staying unchanged the previous month.
  • The US core PPI is forecast to rise 0.2% m/m in January while accelerating 2.5% y/y.
  • The US crude oil inventories are seen rising 2.2 million barrels.
  • The NZ GDP is expected to increase 0.8% Q/Q in the final quarter of 2017.

Major market movers

  • The US Dollar is gaining back some traction after fallout on the US inflation and Trump's Tillerson dismissal on Tuesday.
  • Euro ticked about 30 pips lower to 1.2370 area after ECB President Draghi comments and dragged Sterling lower with it.

Earlier in Asia/Europe

  • China’s industrial production rose 7.2% y/y in January, beating the expectations.
  • China’s retail sales rose 9.7% y/y in January.
  • German final HICP rose 1.2% y/y in February, meeting the market estimate.
  • ECB President Mario Draghi said that the inflation is way below the ECB target and the Euro’s strength could weigh on inflation down the line.
  • The Eurozone employment rose 0.3% Q/Q in the final quarter of 2017, meeting the market forecast.
  • The Eurozone industrial production fell 1.0% m/m in January while increasing 2.7% y/y falling short of expectations.

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