Pound Looks to Core CPI for Rates Cues, Greece Woes Continue to Fester

2015-02-17 06:15:00

Talking Points:

British Pound to Overlook Headline UK CPI, Take Cues from Core Figures
Greece Woes Remain in Focus as EU Finance Ministers Convene in Brussels
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January’s UK CPI figures are in focus in European trading hours. The headline year-on-year inflation rate is expected to drop to 0.4 percent, the lowest since at least 1989, but the BOE’s sanguine posture on this front will likely dilute the figures’ potency. Speaking in the context of the quarterly Inflation Report released last week, Governor Mark Carney said the central bank intends to look past near-term downside inflation shocks from falling food and oil prices.

Instead, all eyes will be focused on the core CPI print – a reading that excludes the influence of volatile items the BOE has opted to dismiss – which is expected to rise for a second month to 1.4 percent. An upbeat outcome may bolster bets on an interest rate hike this year, driving the British Pound higher. UK price growth data has broadly tended to underperform relative to consensus forecasts over the past two years however. If that proves to foreshadow a disappointing print, the UK unit may retreat.

Meanwhile, EU finance ministers are gearing up for a meeting in Brussels, with the impasse over Greek debt obligations looming large. Another fruitless Eurogroup sit-down yesterday ended with continued stalemate. Greece now has until the end of the week to request an extension of its existing bailout arrangement – a move staunchly opposed by the newly-minted Syriza-led government – or risk running out of cash.

Needless to say, the latter scenario carries potentially disastrous consequences, with the worst-case scenario amounting to Greece’s exit from the Eurozone. With that in mind, investors will be watching with keen interest to see if anything more substantive emerges from today’s outing. While political brinksmanship prior to the emergence of an accord has been the status quo since the onset of Euro area debt woes, the possibility of failureis acutely real. This shrouds the outlook for the Euro and sentiment-sensitive currencies like the Japanese Yen in uncertainty for the time being.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	AUD	ANZ Roy Morgan Weekly Consumer Conf	109.8	-	111.7
0:30	AUD	RBA February Meeting Minutes	-	-	-
1:30	CNY	China January Property Prices	-	-	-
1:45	CNY	MNI Business Indicator (FEB)	52.8	-	53.7

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:00	EUR	EU 25 New Car Registrations (JAN)	-	4.7%	Low
8:00	EUR	EU Finance Ministers Meet in Brussels	-	-	High
9:30	GBP	CPI (MoM) (JAN)	-0.8%	0.0%	High
9:30	GBP	CPI (YoY) (JAN)	0.4%	0.5%	High
9:30	GBP	Core CPI (YoY) (JAN)	1.4%	1.3%	High
9:30	GBP	PPI Input n.s.a. (MoM) (JAN)	-2.4%	-2.4%	Low
9:30	GBP	PPI Input n.s.a. (YoY) (JAN)	-11.9%	-10.7%	Low
9:30	GBP	PPI Output n.s.a. (MoM) (JAN)	-0.3%	-0.3%	Medium
9:30	GBP	PPI Output n.s.a. (YoY) (JAN)	-1.4%	-0.8%	Medium
9:30	GBP	PPI Output Core n.s.a. (MoM) (JAN)	0.1%	0.0%	Medium
9:30	GBP	PPI Output Core n.s.a. (YoY) (JAN)	0.4%	0.8%	Medium
9:30	GBP	RPI (MoM) (JAN)	-0.7%	0.2%	Low
9:30	GBP	RPI (YoY) (JAN)	1.3%	1.6%	Low
9:30	GBP	RPI ex Mort Int. Payments (YoY) (JAN)	1.3%	1.7%	Low
9:30	GBP	ONS House Prices (YoY) (DEC)	9.5%	10.0%	Low
10:00	EUR	German ZEW Survey (Current Situation) (FEB)	30.0	22.4	High
10:00	EUR	German ZEW Survey (Econ. Sentiment) (FEB)	55.0	48.4	High
10:00	EUR	Eurozone ZEW Survey (Econ. Sentiment) (FEB)	-	45.2	Medium