The main fundamental news today opens in Europe with German factory order due at 11.00 am GMT, following the German PPI data released earlier.  The latter is an important leading indicator of consumer inflation and measures change in the price of goods sold by manufacturers which is usually passed directly onto the consumer.  The forecast was for -0.1% and the actual came in at -1.2%.  This figures is the strongest signal yet that we are now entering a deflationary period in Europe.   The German factory order figures data is also a leading indicator and measures the change in the total value of new purchase orders placed with manufacturers.  If the actual is better than forecast then this is generally seen as Euro positive.  The forecast is for -1.9%, significantly down on the previous of -6.9% and therefore not expected to fall as much as last month.

Two other important pieces of news in this afternoon’s economic calendar  from the US; first will be the result of the crude oil inventories from the EIA which measures the change in the number of barrels of crude oil in inventory during the past week.  The effect of these numbers can be variable as they are both inflationary and deflationary indications.  Whilst this is a US specific data set it tends to have a greater impact on the Canadian dollar rather than the US dollar due to the former’s sizeable energy resources.

The second and final piece of news comes at 6.00 pm GMT this evening with the release of the Federal Budget Balance from the Department of the Treasury.  The previous figure was -83.8 billion dollars and the forecast is for -203 billion dollars this time around.  This colossal figure represents the difference between the government’s income and spending and needless to say a negative figure indicates a deficit!

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