Euro boosted as growth and inflation take off

Yesterday’s markets

1st February 2017

  • JPY - BOJ Press Conference
  • EUR - ECB President Draghi Speaks
  • CAD - GDP m/m: 0.4%
  • USD - CB Consumer Confidence: 111.8

The markets indicated at the close of 2016 that we could see the Euro hit parity against the Dollar, as it hit lows not seen in 13 years. The sentiment remains the same for 2017, as the Euro threatens to fall lower as the new President of the US firmly takes his place in the White House.

However, yesterday saw growth in the Eurozone for Q4, as the first reading for the last quarter of 2016 came in at 0.5% above the 0.4% forecasted.  The upturn means, that as it stands, the annual figure is showing at 1.8% rise compared to the previous year. This being the first time that the single currency zones GDP has risen at a faster pace than the US since 2008. 

What also contributed to gains for the Euro was the jump in consumer prices from 1.1% to the now 1.8%.  This jump has inflation rising faster to the ECB’s 2% target than they had anticipated. This has markets already looking for the Central Bank to take action, such as possibly tapering their current QE program. In addition, unemployment dropped to its lowest since May 2009 as the Jobless rate came in at 9.6% for December.

Today’s markets

31st January 2017

  • GBP - Manufacturing PMI
  • USD - ADP Non-Farm Employment Change
  • USD - ISM Manufacturing PMI 
  • USD - Crude Oil Inventories 
  • USD - FOMC Statement
  • USD - Federal Funds Rate 

There is a host of Manufacturing PMI data hitting the wires today as the Eurozone, UK and US all post their respective gauges.  Looking across all regions, they are all due to remain in expansion territory and are expected to have little impact on the markets.

Attention will be focused on the Fed rate decision later this evening and more so the statement from Fed Chair Janet Yellen.  With no move in the rate expected the focus will be on the statement given after from Janet Yellen. Markets will be focused on detecting hints as to when the Fed are likely to increase rates again and what economic indicators they are watching for improvement.  Also, if the Fed refer to any agenda that the US President might be implementing that could cause them to hold off any actions.