December 8, 2022

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Economic data coming up in the European session

3 min read

German inflation in focus alongside the post-FOMC vibes

So, the Fed just had a play with words and didn’t really offer too much of anything new with regards to tapering. They cited progress towards their objectives but the market focused on the lack of clarity (still) on the taper timeline and the dollar fell.

Powell continued to reaffirm that the labour market is arguably the key spot to watch before making the next move, while still brushing aside inflation as ‘transitory’.

All things considered, there’s not much to work with before Jackson Hole next month.

The dollar may be down in the aftermath but I don’t see the trend persisting for too long. The Fed can only put off tapering for so long, unless they really are adamant on seeing the substantial slack in the labour market dissipate.

Barring any negative developments in the virus situation in the US, the Fed is still on track to tapering and that’s arguably the key takeaway – if not August then by December surely. The dollar should find footing as such and not fall off too drastically.

The bond market reaction will be interesting though. 10-year yields saw no reason to get back up to 1.30% and pressure back towards the month’s lows near 1.13% will continue to validate the series of lower highs, lower lows since May.

0700 GMT – Spain July preliminary CPI figures

Spanish inflation is estimated to keep thereabouts and perhaps higher than June, with the previous month recording an annual inflation reading of +2.6% y/y. Given higher cost inflation pressures still prevalent across the region, that should translate to higher consumer inflation as well in the months ahead.

0755 GMT – Germany July unemployment change, rate

Prior release can be found here. Overall labour market conditions are showing some decent improvement and the trend should continue into the summer months, bolstering consumption confidence in the German economy.

0830 GMT – UK June mortgage approvals, credit conditions

Prior release can be found here. General read of overall credit conditions in the UK economy, which is still gradually recovering back to pre-pandemic levels.

0900 GMT – Eurozone July final consumer confidence

0900 GMT – Eurozone July economic, services, industrial confidence

Prior release can be found here. Euro area economic confidence is expected to tick a little higher as overall conditions hold up amid the summer optimism. There are concerns on the virus trend but that isn’t enough to dent the positivity for now.

1200 GMT – Germany July preliminary CPI figures

Prior release can be found here. German inflation is estimated to jump higher this month, reflecting an annual reading of over +3.0% y/y. That likely comes on the back of higher cost inflation pressures for the most part and that may be a problem that could bite at businesses and consumption in the months ahead, should it persist for longer.

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

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