Confident Draghi to boost the EUR

Daily Update

Yesterday’s Market

• EUR Consumer Price Index, Consumer Price Index - Core, Harmonized Index of Consumer Prices
• USD Consumer Price Index & Consumer Price Index ex Food & Energy, Industrial Production, Capacity Utilization, NAHB Housing Market Index & Fed’s Beige Book
• CAD BOC Rate statement & Interest Rate decision
• USD Fed’s Janet Yellen's Speech

Yesterday Explained

In the data front, Germany and the EU released the final revisions of December CPI, which matched expectations and previous estimates, passing unnoticed when it comes to price action. In the US, the Consumer Price Index increased 0.3% in December on a seasonally adjusted basis, while over the 12 previous months, the index rose by 2.1%, also in line with market's forecast.

The Bank of Canada left its target rate for the overnight rate unchanged at 0.50%, which was in line with consensus forecasts. According to the central bank, uncertainty surrounding the global outlook is undiminished, particularly with respect to policies in the United States, although initial assumptions surrounding prospective tax policies has resulted in a modest upward revision to the US growth outlook.

Overall US Dollar had a bad day however the currency's rebound was then magnified by optimistic comments from Janet Yellen. U.S. Dollar also shot higher with 10 year yields rising nearly 10bp, validating the reversal in market sentiment.

Today’s Market

• AUD Employment change & Unemployment Rate
• ECB Interest Rate Decision, Deposit Rate Decision & ECB Monetary policy statement & Press conference
• USD Housing Starts, Building Permits, Initial Jobless claims, Philadelphia Fed Manufacturing Survey

Today’s Focus

Australia will release reports on Employment change & Unemployment Rate early morning which captures the situation of job market in Australia. By Mid-day ECB will release decision on Interest rate and deposit rate.

The European Central Bank kept interest rates unchanged in December but cut asset purchases to 60 billion euros per month, from the current 80 billion euros. The bank has prolonged the bond-buying program by nine months until the end of 2017, indicating the central bank does not intend to abandon its plans to boost the Eurozone’s economy. Central Bank will likely leave its monetary policy unchanged, while Draghi is expected to offer a hawkish, confident speech.

Day will end with few economic reports from USA which will capture the housing market and job market in USA.