The Euro strength could ponder on inflation down the line; US PPI advanced by 0.2%, while retail sales saw a decline in February

Mar 15 • Morning Roll Call • 999 Views • Comments Off on The Euro strength could ponder on inflation down the line; US PPI advanced by 0.2%, while retail sales saw a decline in February

According to the ECB President Mario Draghi’s speech yesterday, during the ECB conference, the monetary policy will remain patient and prudent with sustained adjustment in the path of inflation towards target is the condition for net asset purchases to end. He has also mentioned that there is still a need to see further evidence that inflation dynamics are moving in the right direction and is now more confident than in the past that it is on the right track. In addition, net asset purchases remain necessary for now and any policy adjustments are to remain predictable, thus will proceed at a measured pace. Euro strength could weigh on inflation down the line.

Furthermore, Yves Mersch, Member of the Executive Board of the European Central Bank, was noted saying that all the indicators point to the continuation of economic growth in Europe and any change in the monetary policy stance is always a shock to the economy, positive or negative. Basically, the bigger the imbalances, the less the economy is prepared for a monetary policy change, while loose monetary policy, loose fiscal policy are asking for trouble. The primary objective according to Mr. Mersch, is price stability, which is defined as an inflation below, but close to 2%, in the medium term.

With regards to the news that came from the US yesterday, the Producer Price Index for final demand has advanced 0.2% in February, seasonally adjusted. For the 12 months ended in February, prices for final demand less foods, energy and trade services increased 2.7%, the largest rise since 12-month percent change data were available in August 2014. On the other hand, advance estimates of U.S. retail and food services sales for February 2018 were $492.0 billion, a decrease of 0.1 percent from the previous month, but 4.0 percent above February 2017. As a result of the news, the US dollar weakened as a reaction to the worse than forecasted US retail sales.

The macro events expected on Friday concerning the US are the housing starts forecast to shrink 5% to a 1.26 million pace from 1.326 million in January. Industrial production is forecasted to rise 0.2% in February from -0.1%, while capacity use increases to 77.6% from 77.5%. Preliminary Michigan sentiment may top 100.0 for March from 99.7 previously.

Traders will also be looking at the data coming from Canada, with Manufacturing shipments that are expected to fall 1.0% in January (m/m) after the 0.3% dip in December. International securities transactions for January are also out on Friday.

Regarding the Eurozone, on Friday we are expecting the Italian CPI, as well as the overall Eurozone CPI results. -FXStreet

EUR/USD

The EUR/USD failed to take out the descending trendline (sloping lower from Feb. 16 high and March 8 high) yesterday after ECB’s Draghi stressed the need to be patient and persistent because underlying inflation remains subdued. -FXStreet

GBP/USD

The GBP/USD is stuck to the ceiling in Asia trading, testing into 1.3980 ahead of the European market session. The Sterling has remained surprisingly resilient in the face of risk-averse market conditions and continues to keep pushing despite still drifting off of January’s high. -FXStreet

USD/JPY

The USD/JPY has recovered 20 pips from the session low of 105.82, tracking the uptick in the S&P 500 futures. As of writing, the futures are trading 6 points or 0.24 percent higher on the day. -FXStreet

Gold

Gold faded mixed US economic data-led early NA session spike back closer to $1330 and refreshed session lows in the last hour. –FXStreet

 

KEY ECONOMIC CALENDAR EVENTS FOR March 15th

CHF PPI (m/m)
CHF Libor Rate
CHF SNB Monetary Policy Assessment
USD Empire State Manufacturing Index
USD Import Prices (m/m)
USD Philly Fed Manufacturing Index
USD Unemployment Claims
NZD Unemployment Claims

 

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