EUROPEAN session review: market awaited US retail sales data

Data released: 

07:00 GMT Germany Wholesale Price Index (MoM) (Dec) 0.4% 0.1% -0.2% 

07:00 GMT Germany Wholesale Price Index (YoY) (Dec) -1.8% -2.1% -2.2% 

09:30 GMT UK Consumer Price Index (YoY) (Dec) 2.0% 2.1% 2.1% 

09:30 GMT UK Consumer Price Index (MoM) (Dec) 0.4% 0.5% 0.1% 

09:30 GMT UK Core Consumer Price Index (YoY) (Dec) 1.7% 1.8% 1.8% 

09:30 GMT UK DCLG House Price Index (YoY) (Dec) 5.9% 5.5% 

09:30 GMT UK Producer Price Index - Input (YoY) n.s.a (Dec) -1.2% -1.5% -1.0% 

09:30 GMT UK PPI Core Output (MoM) n.s.a (Dec) 0.1% 0.0% -0.1% 

09:30 GMT UK PPI Core Output (YoY) n.s.a (Dec) 1.0% 0.9% 0.7% 

09:30 GMT UK Producer Price Index - Input (MoM) n.s.a (Dec) 0.1% -0.2% -0.7% 

09:30 GMT UK Producer Price Index - Output (MoM) n.s.a (Dec) 0.0% 0.2% -0.2% 

09:30 GMT UK Producer Price Index - Output (YoY) n.s.a (Dec) 1.0% 1.1% 0.8% 

09:30 GMT UK Retail Price Index (MoM) (Dec) 0.5% 0.5% 0.1% 

09:30 GMT UK Retail Price Index (YoY) (Dec) 2.7% 2.7% 2.6% 

10:00 GMT EMU Industrial Production w.d.a. (YoY) (Nov) 3.0% 1.4% 0.5% 

10:00 GMT EMU Industrial Production s.a. (MoM) (Nov) 1.8% 1.4% -0.8% 

It’s not overly optimistic picture for the dollar. The headline gain is likely to be a modest 0.1%, with a bit more strength in the detail. Maybe a jump in small business optimism will help sentiment. If the news is enough to stop the fall in Treasury yield though, it will also be enough to help the dollar build a base off which to appreciate later in the week. 

EURO 

The euro still consolidates in the narrow range. Eurozone industrial production increased 1.8% in November and 3% YoY, recording its fastest pace in more than 3 years.

EUR/USD holds at $1.3670. Initial resistance comes at $1.3720 and $1.3820 (Dec 30 highs). Minor support is near $1.3620. Below losses may widen to $1.3520 (Dec 3 lows). 

POUND 

The pound pared gains versus the dollar and the euro after a report showed U.K. inflation unexpectedly slowed in December, reaching the Bank of England’s 2% target for the first time in more than four years. 

Annual consumer-price inflation slowed from 2.1% in November. The median estimate was for the rate to remain unchanged.

GBP/USD recovers to $1.6440. Resistance remains at $1.6520 with stronger one - at $1.6580 (Dec 27 highs). Initial support is around $1.6320. 

YEN 

The yen fell the most in four weeks against the dollar after a government report showed Japan’s current-account deficit widened to a record in November. 

Japan’s currency declined as separate data showed investors boosted holdings of dollar-denominated bonds for a fifth month. 

Japan posted a record 592.8 billion yen shortfall in its current account, the Ministry of Finance said in Tokyo.

USD/JPY recovered to 103.60. The recent low at 102.84 signals a reversal of the downtrend from 105.29 and current rebound should be considered corrective. Next slide may go through 102.45 to 101.60. Key resistance comes at 103.90. 

DATA AHEAD: 

At 15:00 GMT Nov Business Inventories come with 0.4% expected after 0.7% earlier. 

At 17:45 GMT and 18:20 GMT Philadelphia Fed's Plosser and Fed's Richard Fisher speek respectively.

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