Fundamental Analysis 17-10-2016
With the EUR under fire and losing just under 2% of its value against the USD, today’s data is key to determining the future outlook of the EUR. The EU Final CPI y/y, expected at 0.4%, will show whether the ECB`s actions have managed to ignite growth or not. A worse than expected print will imply that the EU economy is in free fall and that the CB would have to take more measures if they wish to reach their mandate of 2% inflation which would weigh heavy on the EUR. ECB President Mario Draghi will also be speaking later today and any clue to the future of the ECB`s monetary policy stance will impact the single unit currency too. If he strikes a hawkish tone, we will see the EUR stabilise while a more dovish tone will see the EUR continue to decline.
Out of the US, we have the Empire Manufacturing Index, Capacity Utilization Rate and Industrial Production figures expected at 1.1, 75.6% and 0.3% respectively. With the FED on close watch, better than expect data will be favoured by bulls who have been steadily increasing their holdings as they anticipate a bullish move by the FED in their December meeting, data allowing. Worse than expected data will see the USD lose some ground as the news dampens the prospect of a US rate increase.
The AUD is also under review today as we see the Monetary Policy Meeting Minutes being released and RBA`s Gov Lowe take the stand. Any comments or inclinations towards a hawkish stance to monetary policy will see the recent bullish buying of the AUD vindicated as the Australian economy continues to shine. However, any dovish comments or statements on overheating of the housing markets will see the AUD depreciate as markets price in a potential intervention by the RBA.
Today`s key economic data is as follows:
Final CPI y/y expected at 0.4%
ECB President Draghi Speaks
German Buba President Weidmann Speaks
Empire State Manufacturing Index expected at 1.1
Capacity Utilization Rate expected at 75.6%
Industrial Production m/m expected at 0.3%
FOMC member Fischer Speaks
RBA Gov Lowe Speaks
Monetary Policy Meeting Minutes
CPI q/q expected at 0%