Rational FX: Germany’s PPI YoY and MoM figures beat expectations [18/02/2011]

Yesterday’s Market Movers

• Yesterday saw MPC hawk Andrew sentence giving his thoughts regarding the BoE inflationary report on Wednesday, Sterling rose and recouped most of its losses  after his hawkish comments towards interest rates being raised sooner rather than later.
• Andrew Sentance who has been calling for a rate hike since June 2010 said BOE’s inflationary forecasts were giving the bank a headache in terms of  interest rates and that it would act when it deems necessary and not when the market calls for it. This saw sterling trade towards the 1.6200 levels.
• In the euro zone we had Consumer confidence come in slightly better an expected which shows that people in the euro zone are more confident, this again shows a small sign of growth in the EU economy. The euro gained against the US dollar however lost ground towards the end of the day.
• In the US we had the Consumer Price Index. MoM Came in line with expectation however we can put this down to the horrific weather the United States over the past month. The YoY also came in inline consensus but showed little movement as possible risk appetite entered the market.
• Initial jobless claims was the second piece of information in the United States, these were came in slightly higher than expected at 410,000 and continues to show that people filing for benefits and unemployment is still a concern for the economy.

Today’s market movers

• In Euro zone for Germany we had the PPI YoY and MoM figures. These figures came in better than expected however this had little effect on the Euro.
• In the UK we have the Retail sales figures YoY and MoM both figures are expected better. If the figure comes in better we could see Sterling rally as this would show that more people are spending in the economy after two tuff quarters.