European Data Dominates Schedule
The market’s focus turns back to Europe, with plenty of economic data scheduled for the session. Although there is still concern regarding both Italian and Greek governments as well as the European’s timetable for a crisis resolution, traders will be focusing in on four key surveys in today’s session.
UK consumer prices are expected to slow, rising by 5.1% on an annualized basis in the month of October. Month over month figures are anticipated to be even tamer, rising by 0.2%. These figures are lower compared to September’s 5.2% annualized advance – and a monthly 0.6% gain. For the record, this would be the first decline in inflationary pressures in the economy in 3 months – supportive of Bank of England’s forecasts for a medium term dissipation of rising consumer prices. Nonetheless, should the report match earlier estimates, it would mean another inflation letter will have to be written by Governor Mervyn King, even as policymakers remain steadfast in their current monetary stance.
The CPI data will be followed by both the German and European Union ZEW economic sentiment surveys. Although both reports are likely to gain some attention through the session, it will be the German ZEW that traders will be targeting. The reasoning behind this lies in the fact that the report is anticipated to show an eighth straight decline for the month of November. Expectations for the survey are set at a -51.7, further below October’s -48.3. Survey results are widely expected to show the strain of the recent month of drama involving Italy and Greece, further damaging the country’s expansion potential. Current assessments are additionally expected to show some weakness, falling to a contractionary 32 reading.
Those strains will be most visible through the German and EU gross domestic product reports scheduled for later on in the session. European Union growth is anticipated to have stayed relatively in line – regardless of what has transpired over the last month or so. This is why the figure is widely estimated to show an expected 1.4% expansion for the third quarter. But, German reports are expected to exhibit yet another quarter of slowdowns.
Quarterly GDP reports are estimated to reveal the truth that the region’s largest economy stalled on an annualized basis in the third quarter of 2011, even though quarterly figures will likely show a 0.5% gain. Annualized expansion is seen as rising by only 2.4%, compared to a more robust 2.8% in the second quarter. The data is expected to prop up speculation of another rate cut by ECB President Draghi before the year end. Not a good thing for a Euro that remains under duress.