EUR/USD Forecast Jan. 12-16 2015
QE in the euro-zone seems imminent for the January 22nd meeting, after the euro-zone officially slipped into deflation. Oil prices were clearly to blame. Can the tick up in core prices help? Probably not. Worries about Greece and the tragic terror attack in Paris also weighed in, while the fall in German unemployment was shrugged off. In the US, things are looking OK, with 252K jobs gained in December, but the slip in wages is causing some worries.
- German WPI: Tuesday, 7:00. The wholesale price index in Europe’s largest economy provides further insight about inflation in the old continent. A rise of 0.2% is expected after the slide of 0.7% beforehand.
- ECJ decision: Wednesday, during the European morning. The European Court of Justice received the case of the legality of the ECB’s actions from the German Constitutional Court. The wheels of justice move slowly: this case is related to the OMT, introduced in 2012 by the ECB and never used. However, the legality of buying sovereign bonds is more actual than ever, with the ECB on the brink of a QE program. The court is expected to approve the actions of the central bank, or more precisely, not intervene. The ruling still draws attention and volatility.
- French CPI: Wednesday, 7:45. Europe’s second largest economy experienced a fall of 0.2% in prices during November, and no change is expected for December. However, price drops could be seen in December due to oil prices. The French report feeds into the final euro-zone read later in the week.
- Industrial Production: Wednesday, 10:00. While we already have the German and French reports at this point, the full publication still rattles markets. Output grew by only 0.1% in October and a similar number is likely for November: no change is expected.
- Trade Balance: Thursday, 10:00. The euro-zone enjoys a surplus in its trade balance, and this keeps the euro bid. After experiencing a positive figure of 19.4 billion in October, and even wider surplus is on the cards for November: 21.3 billion.
- German Final CPI: Friday, 7:00. According to the initial publication, Germany saw a significant slowdown in year over year inflation in December: 0.1%. The lowest figure since 2009 will likely be confirmed in the final read.
- Final inflation numbers: Friday, 10:00. The initial read for the euro-zone was a big blow: a drop of 0.2% in prices year over year in December – an annual deflation in 2014. However, this fall was fueled by oil prices as core prices actually ticked up from 0.7% to 0.8%. Both numbers are expected to be confirmed.
* All times are GMT