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Euro to Dollar – 12th February 2009

Today sees five pieces of economic data being released for the euro to dollar, two in Europe this morning and three in the US this afternoon. We start with a fairly dry piece of news from the ECB which reveals the statistical data that the ECB Governing Board evaluated when making the latest interest rate decision, and provides detailed analysis of current and future economic conditions from the bank’s viewpoint. The impact on the market is generally limited and is released seven days after the rate decision itself. An hour later we have the industrial manufacturing figures which highlight the change in the total inflation adjusted value of output produced by manufacturers, mines, and utilities. Again the figures have a limited impact on the currency markets as the French and German equivalent figures are released earlier, and as these account for around 50% of output in the Eurozone, tend to have more weight. In general if the actual are better then forecast then this is generally good for the Euro with a forecast of -2.3% against a previous of -2.2%.

Moving to the US this afternoon we have the Core Retail Sales, Retail Sales, and Unemployment claims, all of which are significant indicators,but with the current turmoil and attention on the various bailout packages being implemented and discussed I’m not sure how much weight any of these numbers carry at the moment. The Core Retails numbers ignore car sales ( if indeed there are any this week!) as these account for around 20% of sales, and therefore it is generally felt that this figure provides a more accurate snapshot with the forecast being -0.5% against a previous of -3.1%. If the actual is better than forecast then this will be good news for the US dollar. Retail sales are forecast at -0.8% against a previous of -2.7%. Finally we have the Unemployment Claims which measures the number of new people claiming unemployment insurance for the week. This is a generally viewed as a lagging indicator and if the numbers are better then expected then this will be good for the US dollar. The forecast is 610,000 against a previous of 626,000.