Domestic growth showed signs of improvement with retail sales jumping 4.7% in December following a 0.1% decline the month prior. The improvement in consumption could be short lived as unemployment rose to 4.6% from 4.4% in January. Companies remain reluctant to add to their payrolls as they fear downside risks to growth remain, which was reinforced by Euro-Zone 4Q GDP rising only 0.1%. The sovereign debt issues in Greece, Spain and Portugal should only increase concerns over the region’s stability. The Euro remains under pressure and its continued depreciation will make the SNB’s goal of franc deprecation a monumental task. Despite the might of a sovereign central bank it is no match for the broader market. Europe’s troubles could potentially cause a panic and a sharp selloff of the single currency.
This week’s fundamental calendar will like most week’s present very little in the form of event risk. However, the upcoming producer % import price trade balance reports will provide insights into domestic growth and inflation. The combined price reading fell 2.5% in December and is expected to have dropped another 1.5% in January. Despite further evidence of potential deflation, we may not see any action from the SNB as the country’s markets close for Carnival. -JR
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