Euro to Look Past IFO Data, Murky US Fiscal Policy Still in Focus
- Euro likely to overlook Germany’s IFO business confidence survey
- Markets remain preoccupied with making sense of US fiscal policy
- Yen corrects higher, Aussie Dollar drops after soft 4Q CPI report
Germany’s IFO survey of business confidence headlines the economic calendar in European hours. The report is expected to put sentiment at the highest level since July 2011. An upbeat result seems unlikely to offer much support to the Euro considering its limited implications for near-term ECB policy trends. The central bank seems firmly locked in wait-and-see mode, monitoring December’s stimulus strategy update.
Besides that, investors continue to keep a watchful eye for anything that might illuminate the outlook on US fiscal policy. Unwinding of the so-called “Trump trade” commenced in the information vacuum after last week’s inauguration and seemingly remains the path of least resistance, but a stray headline (or tweet, for that matter) giving clues about the path forward may shake things up and trigger significant volatility.
The Japanese Yen outperformed in overnighttrade, rising against all of its major counterparts in a move that appeared corrective after the currency’s laggard performance yesterday. The Canadian Dollar likewise traded higher, tracking crude oil prices. The Australian Dollar was weakest on the session, sinking after a disappointing fourth-quarter CPI report.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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