Back
31 Dec 2014
German CPI may see upside risks – TDS
FXStreet (Barcelona) - The TD Securities Team share their expectations for the upcoming German CPI, German IP and Scandies PMI data, and anticipate German CPI to be on the upside with a 0.3%-0.4% Y/Y reading.
Key Quotes
“German CPI (Mon 5 Jan): While markets are looking for German inflation to fall from 0.5% to only 0.2% Y/Y in December, notwithstanding the downside surprise in the Spanish CPI data, we see upside risks for Germany and look for a reading of 0.3-0.4% Y/Y instead.”
“Energy prices will clearly be a drag, and we expect them to subtract around 0.6ppts from the headline print, double the size of their drag in Nov.”
“But given base effects from last year, we look for core inflation to rebound a bit, helping to counteract the downward pressure from lower oil prices. The German data will give us a better tracking for the Eurozone flash CPI print on Wed.”
“Scandies PMIs (2-5 Jan): We see a bit of upside risk for Sweden’s manufacturing PMI (Friday the 2nd), given the improvement in the Eurozone survey data for the month, and particularly for the German data. We see downside risks though for Norway (Monday the 5th), as the steep drop in oil prices may begin to weigh on sentiment across the rest of the economy as well.“
“German Industrial Production (Fri 9 Jan): The early global data has us looking for softer German IP, as we think that the risks lie toward a small contraction compared to the +0.2% consensus forecast. This will be some of the last hard data into the ECB decision on the 22nd, and while there are still a lot of factors to consider, further downside growth surprises would increase the risks that we see QE delivered sooner rather than later.”
Key Quotes
“German CPI (Mon 5 Jan): While markets are looking for German inflation to fall from 0.5% to only 0.2% Y/Y in December, notwithstanding the downside surprise in the Spanish CPI data, we see upside risks for Germany and look for a reading of 0.3-0.4% Y/Y instead.”
“Energy prices will clearly be a drag, and we expect them to subtract around 0.6ppts from the headline print, double the size of their drag in Nov.”
“But given base effects from last year, we look for core inflation to rebound a bit, helping to counteract the downward pressure from lower oil prices. The German data will give us a better tracking for the Eurozone flash CPI print on Wed.”
“Scandies PMIs (2-5 Jan): We see a bit of upside risk for Sweden’s manufacturing PMI (Friday the 2nd), given the improvement in the Eurozone survey data for the month, and particularly for the German data. We see downside risks though for Norway (Monday the 5th), as the steep drop in oil prices may begin to weigh on sentiment across the rest of the economy as well.“
“German Industrial Production (Fri 9 Jan): The early global data has us looking for softer German IP, as we think that the risks lie toward a small contraction compared to the +0.2% consensus forecast. This will be some of the last hard data into the ECB decision on the 22nd, and while there are still a lot of factors to consider, further downside growth surprises would increase the risks that we see QE delivered sooner rather than later.”