European FX Outlook: The UK CPI, Eurozone GDP and ECB conference set to rock on Tuesday

What you need to know before markets open:

  • Brexit talks stalemate and political uncertainty surrounding PM May in the UK weigh on Sterling ahead of October CPI data.
  • The UK CPI, central bankers´ speeches, and the Eurozone GDP headline Tuesday.

Tuesday’s market moving events

  • 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 Evans is due to deliver a speech titled "The future of Odyssean and Delphic guidance" at the Central Bank Communications Conference hosted by the European Central Bank, in Frankfurt at 8:05 GMT.
  • Italian GDP is expected to rise 0.5% q/q in Q3.
  • The UK CPI is expected to rise 3.1% y/y in October.
  • Eurozone GDP is expected to rise 0.6% q/q in Q3.
  • Eurozone industrial production is set to fall -0.6% m/m in September.
  • German ZEW index of investors´sentiment is expected to rise to 19.7 in November.
  • 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 since 10:00 GMT.
  • The US 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 forex market movers

  • Watch Sterling surfing the wave of Brexit-related uncertainty an inflation data.
  • EUR/USD seeking direction with growth data ahead.

Monday’s macro summary

  • Philadelphia Fed president Patrick Harker said he doesn't expect dramatic changes in Fed policy when asked about the appointment of Powell as next Fed chair. In terms of policy outlook Harker lightly penciled in December rate hike with three rate hikes in 2018 as he remained cautious about low-inflation conundrum, expecting rebound. “I have penciled in one rate hike this year and three next year, but want to make sure we make progress toward inflation goal,” Harker said.
  • German wholesales prices decelerated to 3.0% y/y in October 2017 compared to +3.4% in September.
  • ECB vice-president Vitor Constancio said the ECB is not yet fulfilling its mandate and that is why monetary policy will have to continue to be very accommodative.
  • Philadelphia Fed sees growth US Q4 GDP at 2.6% vs. the previous forecast of 2.3% while it expects core personal consumption expenditures rising 1.6% compared to 1.8% previously forecast.

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