- German consumer price and wholesale price index – cause for concern?
- UK consumer price and PPI core output – expectations for positive readings
- Mario Draghi’s speech – a time for further stimulus?
Sterling to make further headway tomorrow?
Today is like the calm before the storm, a quiet day for economic data with much of the movements on the exchange a combination of nervous investors and opportunists looking for a quick and easy sell off.
Or are investors trying to gauge tomorrow’s huge day for both the Eurozone and UK? The German consumer price and wholesale price index will kick off tomorrow’s main event. As the powerhouse of Europe, there is no question that German inflation is a huge cog in the Eurozone wheel. But with price changes at a standstill within the German economy and Eurozone inflation bordering on 0%, how will investors interpret tomorrow’s release given Draghi’s decision not to act with monetary intervention?
And what will investors make of the UK’s CPI and PPI release tomorrow? A cheaper Pound will no doubt fabricate the price of goods in the UK as businesses pass on extra costs to consumers. Coupled with strong retail sales in July will it come as a surprise to see positive news from tomorrow’s release?
Mario Draghi’s speech tomorrow – what to look out for
The ECB’s decision not to implement further stimulus at last weeks interest rate decision should be early signs of what is likely to come. With a QE programme sitting at 80bn a month and interest rates at rock bottom. Will Draghi need to look at other options to boost the economies stagnant inflation?
Signs of further QE, an extension of the current programme or a change in Draghi’s tone could impact the Euro. He has remained quite bullish about the Eurozone economy despite obvious signs of concerns. And with the UK’s looming exit from the EU, its a question of who breaks first for investors.
If you’re buying foreign currency this week with Sterling, tomorrow could strengthen your buying position.