EU inflation data likely to dominate ECB announcement on Thursday

<p>A somewhat confusing FX session in Asia looks to have been dominated by flow following a lower Nikkei and a flat Shanghai composite, resulting in […]</p>

A somewhat confusing FX session in Asia looks to have been dominated by flow following a lower Nikkei and a flat Shanghai composite, resulting in a weaker JPY. To compound this theme the AUD is lower following a narrower trade deficit. The deficit was expected to be AUD300 million but came in at AUD118 million, with last month’s data revised to AUD358 million from AUD529 million, with a significant drop in imports noted.

The data highlight today will be CPI figures from Europe at 10am this morning, with the risk being another weak reading making the ECB meeting all the more interesting on Thursday. The German inflation data released yesterday looked to be on the slightly softer side but the market dismissed the month-on-month lower print due to adjustments in the calculation that saw holiday inflation dismissed. The risk is a lower reading pushing the EU further towards a deflation scenario although the market has discounted any action from the ECB at this Thursday’s meeting.

The FOMC minutes from the December meeting which initiated tapering are released tomorrow night and will be closely scrutinized for any indication on the future pace of QE reduction.

 

EUR/USD

Supports 1.3600-1.3575-1.3535 | Resistance 1.3675-1.3725-1.3810

 



USD/JPY

Supports 104.00-103.70-103.45 | Resistance 104.90-105.10-105.50

 



GBP/USD

Supports 1.6335-1.6310-1.6250 | Resistance 1.6430-1.6450-1.6475

 

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