In the latest turn of events, economic reports continue to drive forex price action, with testimonies from central bank officials taking center stage. Yesterday, a couple of ECB hawks decided to join the dovish camp in suggesting negative deposit rates or further quantitative easing for the euro zone. Apparently, Germany’s economic performance is being hampered by the euro’s rallies while deflation remains a threat in the entire region.
As for the UK economy, the inflation report printed a 1.7% in annual CPI which was expected. This led to some gains for the pound, despite marking the second consecutive month wherein annual inflation missed the central bank’s 2% target. This was probably because underlying inflation data came in stronger than expected.
Forex Economic Reports
For today, price action could zoom in on the US data up for release. Durable goods orders data is due, with the headline figure expected to show a 1.1% gain and the core figure estimated to print a 0.3% uptick. Recall that the previous release of this report showed mixed results, with a stronger than expected 1.1% increase in the core version and a 1.0% decline for the headline figure.
Among the US economic reports this week, this particular release will be crucial in determining whether the US dollar can hold on to its recent gains or not. Recall that the dollar drew some support from the FOMC statement when the Fed decided to push through with the taper in asset purchases. However, the dollar failed to sustain its rally when recent economic data still highlighted some weaknesses.
Also due in today’s trading sessions is the GfK consumer climate report from Germany. Yesterday’s Ifo business climate report showed that optimism weakened for February and it wouldn’t be so surprising to see consumer sentiment show the same. If that’s the case, the euro might be in for more weakness as more traders price in the likelihood of negative deposit rates.
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