European FX Outlook: ECB officials set to speak on Thursday

What you need to know before markets open:

  • UK Foreign Secretary Boris Johnson and well known Brexit hardliner confirmed his stance in speech aiming to set a new direction for the divided nation.
  • German Chancellor's spokesman added to jitters asking London to clarify its Brexit negotiations position ahead of Merkel-May meeting scheduled for Friday.
  • The US inflation rose above expectations conforming the path of monetary policy tightening in support of the US Dollar that took a U-turn as equities reversed losses.
  • Japanese Finance Minister Taro Aso said on Thursday that he doesn't see current yen moves as being strong or weak enough to warrant intervention, adding that there was no plan now to respond to FX moves.

Thursday’s market moving events

  • Australian employment rose 16.0K in January with the unemployment rate steady at 5.5%.
  • Japanese industrial production rose 2.9% m/m in December.
  • Spanish inflation is set to fall massive 1.5% m/m in January while increasing 0.7% y/y.
  • ECB executive board member Yves Mersch is scheduled to speak at the "Rencontres du Club SEPA" in Paris, France at 8:55 GMT.
  • ECB chief economist Peter Praet participates in panel discussion at a conference jointly organized by the French Treasury and the IMF in Paris, France at 10:45 GMT.
  • Eurozone trade balance is expected to reach a surplus of €22.4 billion in December.
  • New York Empire State manufacturing index is expected to rise to 17.5 in February.
  • The US PPI is expected to rise 0.4% m/m while increasing 2.5% y/y in January.
  • The US weekly jobless claims are expected to rise 230K
  • Philadelphia Fed index is expected to inch lower to 21.1 in February.
  • The US industrial production is set to rise 0.2% m/m in January.

Major forex market movers

  • The US Dollar was massively supported by the US inflation rising above forecast in January in support of continuous rate increases by Fed. The US Dollar took a U-turn and fell across the board as the US equities jumped higher.
  • Japan’s Finance Minister’s verbal intervention send the USD/JPY to the lowest level in 15-months at ¥106.30.

Wednesday’s macro summary

  • German inflation fell expected -0.7% m/m in January while rising 1.6% y/y.
  • German GDP also rose expected 0.6% Q/Q in the final quarter of 2017 while increasing 2.3% y/y.
  • 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 rose 0.6% Q/Q while rising 2.7% y/y, meeting market expectations
  • The Eurozone industrial production rose 0.4% m/m in December while rising 5.2% y/y.
  • The Bank of England regional agents' report recruitment difficulties had remained at an elevated level while wage growth had picked up. Agents also reported that investment intentions had remained positive, but mainly reflected investment to maintain business activity.
  • The ECB executive board member Yves Mersch is also speaking at the Bundesbank Cash Symposium, in Frankfurt at 10:20 GMT.
  • The US CPI rose above expectation by 0.5% m/m in January while remaining unchanged at 2.1% y/y, the core inflation rose 1.8% y/y in January.
  • The US retail sales fell -0.3% m/m with the core retail sale stagnating at 0% m/m in January.

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