Rational FX: MoM Germany CPI expected to come out lower than previous [27/01/2011]

The first piece of information out yesterday was the BOE minutes. This saw another member of the MPC joining Mr Sentance’s bullish stance on raising interest rates by 25bps, this saw the voting move to a 6-2-1 split. This saw GBP gain some strength against its major counterparts as an increase in interest rate may see greater foreign investment.

In the US the new home sales figure was released. This figure came out a lot stronger therefore we saw support for further risk appetite in the market and saw very little movement on the major currencies

The final piece of data was the Fed interest rate decision which remained unchanged; this had little effect on the market

There is no data out of the euro zone yesterday.

The first piece of data out from Europe is Germany CPI , MoM it is expected to come out a lot lower than previous, however what needs to be considered is these figures were taken from December when bad weather hit Europe as a whole and could have had a detrimental effect on consumer spending

We also have Consumer confidence out from Europe, again is expected to be lower than previous and therefore going hand in hand with Germany CPI and supporting the negative sentiment of the Europe economy.

In the US we have the initial and continuous jobless claim data which is expected to come out worse than previous and may see further risk aversion towards USD. However durable goods orders may show a contrast if the figures come out improved as expected.