July 31, 2012
Pretty slow start for the euro this week, as it didn't shoot off to any new highs or lows versus the dollar and yen. Could we see more of the same ahead of this week's ECB interest rate decision?
As expected, the Spanish economy shrank by 0.4% last quarter. This marks the third consecutive quarter that GDP growth has come in the red. This only provides fuel for those who believe that the Spanish government itself needs a bailout.
For today, we could be in for a bumpy ride as we've got a whole bunch of second-tier data headed our way.
At 6:00 am GMT, German retail sales growth figures are projected to show that sales rose by 0.6% last month. This would be a nice reversal from the 0.3% decline we saw the month before. Later on at 7:55 am GMT, German unemployment change figures are due and expectations are that 9,000 jobs were lost last month. If both these reports come in better than anticipated, it could give the euro a nice boost early in the London session.
Later at 9:00 am GMT, the CPI flash report will be made available. Word on the street is that inflation remains at 2.4%, which is well within the band that the ECB wants. However, if the report comes in to show that inflation is much lower, it could give the central bank some room to lower rates even further.
"The only cable I watch is the pound baby."