A Quiet Economic Calendar Leaves Omicron News and Sentiment Towards the FED in Focus

Tuesday, 14th December

Eurozone Industrial Production (MoM) (Oct)

Wednesday, 15th December

French CPI (MoM) (Nov) Final

French HICP (MoM) (Nov) Final

Spanish CPI (YoY) (Nov) Final

Spanish HICP (YoY) (Nov) Final

Italian CPI (MoM) (Nov) Final

Thursday, 16th December

French Manufacturing PMI (Dec) Prelim

French Services PMI (Dec) Prelim

German Manufacturing PMI (Dec) Prelim

German Services PMI (Dec) Prelim

Eurozone Private Sector PMIs (Dec) Prelim

Eurozone Wages / Trade Data

ECB Policy Decision and Press Conference

Friday, 17th December

German PPI (MoM) (Nov)

German Ifo Business Climate Index (Dec)

Eurozone Inflation (Nov) Final

The Majors

It was a bearish end to the week for the European majors on Friday.

The DAX30 slipped by 0.10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with the CAC40 and EuroStoxx600 ending the day down by 0.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.30{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

Finalized inflation figures from Germany had a muted impact on the majors, with the markets focused on U.S inflation on the day.

Later in the European session, another pickup in inflationary pressure supported a more hawkish set of interest rate projections next week. What remains unclear, however, is how the FED sees inflation and the new Omicron strain impacting growth.

Away from the economic calendar, news updates from labs across the world remained a key area of interest. While early tests showed that vaccine efficacy was materially lower, there were also indications that the new strain was a milder form.

The Stats

It was a quiet day on the Eurozone economic calendar. Finalized German inflation figures were in focus going into the European open.

In November, German consumer prices fell by 0.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was in line with prelim figures. Consumer prices had risen by 0.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} in October.

Germany’s annual rate of inflation accelerated from 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 5.2{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was also in line with prelim figures.

According to Destatis,

  • The inflation rate increased for the 6th time in a row, reaching the highest level recorded in 2021.

  • A higher inflation rate was last recorded in Jun-1992, when the rate of inflation was 5.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Compared with Nov-2020, energy prices were up 22.1{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with prices for food up 4.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Excluding energy, Germany’s annual rate of inflation stood at 3.4{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

  • Prices for services increased by 2.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} compared with the same month a year earlier.

From the U.S

Inflation and consumer sentiment figures were in focus late in the European session.

In November, the U.S core annual rate of inflation picked up from 4.6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 4.9{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, which was in line with forecasts. For the month of November, core consumer prices rose by 0.5{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with consumer prices up 0.8{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

In spite of the pickup in inflation, consumer sentiment unexpectedly improved in December.

According to prelim figures, the Michigan Consumer Sentiment Index climbed from 67.4 to 70.4 versus a forecasted fall to 67.1. Hopes of a pickup in wage growth amidst rising prices supported improved sentiment.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. Continental rose by 1.10{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to buck the trend.

Daimler tumbled by 13.82{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, however, with Volkswagen and BMW ending the day down by 1.00{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.73{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

It was also a mixed day for the banks. Deutsche Bank fell by 0.82{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, while Commerzbank rose by 0.17{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

From the CAC, it was a bearish day for the banks. Soc Gen and Credit Agricole fell by 0.50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.65{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively, with BNP Paribas declining by 1.24{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

The French auto sector had a mixed session, however. Stellantis NV rose by 0.26{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, while Renault ended the day down by 0.45{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}.

Air France-KLM and Airbus SE avoided the red, rising by 0.43{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.08{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

On the VIX Index

It was back into the red for the VIX on Friday, marking a 4th day in the red for the week.

Reversing an 8.44{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} rise on Thursday, the VIX slid by 13.39{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to end the day at 18.69.

The Dow ended the day up by 0.60{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, with the NASDAQ and the S&P500 gaining 0.73{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} and by 0.95{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} respectively.

The Day Ahead

It’s a quiet day ahead on the Eurozone’s economic calendar. There are no material stats due out of the Eurozone to provide the majors with direction.

From the U.S, there are also no stats to consider, leaving the majors in the hands of OPEC’s monthly report and Omicron news updates.

With the FED in action on Wednesday and the ECB in focus on Thursday, it could be a testy start to the week.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 31 points.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


Christopher Lewis

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