Thursday, 02 March 2017

EU CPI, Canada GDP, Japan CPI

After yesterday’s relatively hectic schedule of indicators, today’s schedule is lighter but still has some important points.

I include the Swiss GDP in the table, however it does not seem to have a major impact on the CHF.

EU CPI is forecast to rise, a result that is more likely following yesterday’s higher-than-expected rise in the German CPI. However, ECB President Draghi has made it clear that it’s core inflation that matters for policy makers, not headline inflation, and EU core inflation is forecast to remain at the same level well below the ECB’s 2% target. Thus a rise in the headline figure probably wouldn’t help EUR.

Canada’s GDP is expected to slow somewhat on a month-on-month basis, but accelerate a bit on a year-on-year basis. Even the month-on-month change is simply at the 6-month moving average and so isn’t really much of a deceleration. All told I would say that the expected results fit into the Bank of Canada’s expectations of “improving growth” as set out in the statement following their meeting yesterday, and should prove neutral to slightly positive for CAD.

Japan’s national CPI is forecast to rise modestly at both the headline and core level, but the headline Tokyo CPI for the following month is forecast to fall back into deflation. It’s therefore way too early to consider any rethink of the Bank of Japan’s monetary policy. Thus I would have to say that this figure will probably be neutral to negative for JPY unless there is some major upside surprise.

Note that the Bank of Japan’s favored measure of core inflation – CPI excluding fresh food, energy and the effects of the 2014 tax hike – will now be released every month as part of the regular CPI data, rather than being released five hours later by the BoJ. That’s the figure given above in the table and in the graph. That may mean the market puts more weight than before on this measure.


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