This weekend’s meeting of finance ministers and central bankers from the Group of 20 took few fresh steps to deal with the global financial and economic crisis. It was a lot of talk but little or no specifics or clear prescriptions; while the intentions were good, the markets are looking for action and sadly where the euro zone is concerned officials haven’t been able to come out with consensus on stimulus measures.   On the economic calendar this morning we have a two important pieces of news with the release of CPI and core CPI data in Europe shortly followed by the employment change. The afternoon fundamental news centres around 4 key releases, namely the Empire State Manufacturing Index, TIC long term purchases, the capacity utilization rate and the industrial production figures, month on month.  The day rounds off the euro dollar with a return to Europe and a speech by ECB President – Jean Claude Trichet.

The CPI figures in Europe are expected to show no change from last time – at 1.2% and the data represents the change in the price of goods and services purchased by consumers.  If the actual is better than forecast then this is considered good news for the Euro.  The core CPI data which is released at the same time excludes food, energy, alcohol and tobacco (all the things that make life worthwhile!!) and once again the forecast is for no change at 1.6%.

Finally the series of news announcements is completed with the euroland employment figures which tend to have a muted impact on the market as there are more significant indicators released on a country by country basis.

US data starts with the Empire State Manufacturing Index – an index based on a survey of manufacturers based in New York State.  A figure above zero indicates an improving economic scenario whilst a negative number suggests things are getting worse – needless to say the forecast is negative at -31.5 which is a slight improvement on last month’s index at -34.7.   30 minutes later we have the Department of Treasury data which represents the balance between domestic and foreign investment and will confirm whether foreign investors are still buying US Treasuries.  The market impact can be significant and the forecast is for 44.3 billion dollars against a previous of 34.8 billion.  Whether this increase will have the usual effect of contributing to dollar strength is uncertain since the euro dollar pair is currently more influenced by moves in the stock market –  as witnessed by last week’s bear market rally which has led to the euro strengthening.

Shortly after this announcement the Federal Reserve releases the CUR data which is a leading measure of consumer inflation and indicates the percentage of available resources being used by manufacturers, mining companies and utilities.  The forecast is for 71.1% against a previous of 72%.  Finally we have the industrial production figures which measure the change in the total inflation adjusted value of output from the above group.

Finally the euro to dollar day finishes with a speech from Jean Claude Trichet entitled “Europe – Cultural Identity – Cultural Diversity” in Frankfurt this afternoon – a riveting listen, I am sure!

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