European FX Outlook: All eyes on inflation as Money talk in Bundesbank symposium

What you need to know before markets open:

  • Japanese Yen is on the rise breaking ¥107.00 level.
  • German GDP and inflation will be in the spotlight in Europe while the US retail sales and CPI headline the US session.

Wednesday’s market moving events

  • German inflation is expected to fall -0.7% m/m in January while rising 1.6% y/y.
  • German GDP is expected to rise 0.6% Q/Q in the final quarter of 2017.
  • German Bundesbank president Jens Weidmann is scheduled to deliver opening remarks at the Bundesbank Cash Symposium, in Frankfurt at 8:00 GMT.
  • Swiss SNB board member Zurbrugg is scheduled to deliver a speech titled "Cash - a means of payment yesterday, today, and tomorrow" at the Bundesbank Cash Symposium, in Frankfurt at 8:50 GMT.
  • The Eurozone Q4 GDP is expected to rise 0.6% Q/Q while rising 2.7% y/y.
  • The Eurozone industrial production is set to rise 0.2% m/m in December while rising 4.2% y/y.
  • The ECB executive board member Yves Mersch is also speaking at the Bundesbank Cash Symposium, in Frankfurt at 10:20 GMT.
  • The US CPI is expected to rise 0.3% m/m in January while decelerating to 1.9% y/y, the core inflation is expected to decelerate from 1.9% in December to 1.7% y/y in January.
  • The US retail sales are expected to rise 0.2% m/m with the core retail sale seen rising 0.4% m/m in January.

Major forex market movers

  • Japanese Yen rose to the highest level in 15-months on Tuesday hitting equity markets in Japan with Nikkei falling 0.4% for the second day in a row.
  • The US Dollar trades softer against European majors as US benchmark Treasury yields fall off the 4-year high.

Tuesday’s macro summary

  • French non-farm payroll rose 0.3% Q/Q in the final quarter of 2017.
  • Asakawa, Japan's  Vice Finance Minister for International Affairs, said that he will closely monitor whether the recent JPY rises are speculative.
  • The UK CPI rose 3.0% in January, matching the rise in December.
  • The UK retail price index rose 4.0% in January.
  • The US small business optimism rose to 106.9 in January from 104.9 in December.
  • Cleveland Fed President Loretta Mester said she supports rate rises at a pace similar to last year but will watch the impact of tax and other fiscal policy changes. The US tax changes could add 0.25 to 0.5 percentage points to economic growth for next year or two, but the longer-run impact on investment and hiring are uncertain. Commenting on recent market volatility she said that it is "far away" from having any influence on the economic outlook.
  • Japan’s GDP rose 0.1% Q/Q while rising 0.5% over the year on an annualized basis.

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