Deflationary pressures continue to weigh on the Eurozone

EUR German Retail Sales m/m: 0.7%
GBP Net Lending to Individuals m/m: 5.3B
EUR CPI Flash Estimate y/y: -0.2%
EUR Core CPI Flash Estimate y/y: 0.7%
USD Chicago PMI: 47.6
USD Pending Home Sales m/m: -2.5%
JPY Household Spending y/y: -3.1%
AUD Building Approvals m/m: -7.5%
AUD Cash Rate: 2.00%
AUD RBA Rate Statement
USD FOMC Member Dudley Speaks

Yesterday’s markets continued to digest the weekend’s events, including another Chinese stock market decline and the G20 meeting in Shanghai. The meeting of finance ministers and central bank governors of the Group of 20 major economies in Shanghai concluded on Saturday with a call for governments to do more, and central banks to do less. G20 finance chiefs made only vague commitments to spur growth at the Shanghai meeting which lead to a weakening in Chinese stocks and the Yuan as a risk-off sentiment continued.

The economic calendar was dominated by the Eurozone in the morning session and US afternoon. Firstly, Eurozone inflation continued its downfall with CPI y/y depreciating to -0.2%, its lowest level since March 2015. The deflationary pressures continue to weigh on the ECB as the poor CPI figure adds fuel to the fire for further stimulus measures to be introduced by ECB President Mario Draghi. In the afternoon, the US released its Pending Home Sales figure. Pending Home Sales failed to meet expectations, posting a poor -2.5%.

EUR Spanish Manufacturing PMI
EUR German Unemployment Change
GBP Manufacturing PMI
EUR Unemployment Rate
NZD GDT Price Index
USD ISM Manufacturing PMI
AUD GDP q/q

Manufacturing across the globe will dominate headlines today. China who are a manufacturing led economy will probably have the biggest market reaction to their release. Last month’s figure fell just short of the key 50 mark at 49.4. Anything above the 50 level indicates expansion and below contraction. UK and US manufacturing follow in the European session, both forecast to remain in expansion.