European FX Outlook: Investors sentiment in Germany is set to decelerate in February

What you need to know before markets open:

  • Spain's Finance Minister de Guindos was chosen ECB vice-president, paving the way for the first German ECB president after Draghi’s term expires in 2019.
  • Japan’s Finance Minister Taro Aso confirmed that the economy escaped from asset price deflation doldrums.
  • Investors sentiment in Germany measured by the German ZEW Institute is set to decelerate in February as the outlook for next 6 months from current cyclical peak deteriorates.

Tuesday’s market moving events

  • German PPI is expected to rise 0.3% m/m and 1.9% y/y in January.
  • German ZEW index of investors sentiment is set to decelerate to 16.0 in February.
  • The UK CBI industrial orders are seen decelerating to 10 in February.
  • Canadian wholesale sales are seen rising 0.4% m/m in December.
  • The Eurozone consumer confidence is set to decelerate to 1.0 in February, easing from an all-time high.

Major forex market movers

  • The US Dollar rose against all majors on vacation subdued Monday as the benchmark US 10-year Treasury yields climbed back to 2.90%.
  • Tuesday is the first day after a prolonged weekend in the US while China/Hong Kong are still off for Lunar New Year celebration.

Monday’s macro summary

  • Japan’s trade balance data showed that the stronger yen wasn't dampening activity just yet. Exports in January expanded by 12.2% y/y while imports rose 7.9% y/ y.
  • The Eurozone current account surplus reached €29.9 billion in December on a seasonally adjusted basis.
  • The UK Rightmove house price index rose 0.8% m/m in February.
  • The Bank of England Governor Mark Carney delivered a speech about leadership and values at Regent's University, no reference to monetary policy was made.

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