There are 6 items of economic news relevant to the euro to dollar pair of which the last is probably the most important on the fundamental news calendar today and this is yet another speech from Jean Claude Trichet in which the market looks for subtle clues to future monetary policy, and in particular whether he will adopt a dovish or hawkish tone.

The market kicked off with the German ZEW figures which came in better than expected at -3.5 against a forecast of -7.7 surprising the market with German investor confidence rising.  As a result the Euro promptly fell which is the reverse of what is supposed to happen!!  ZEW is considered a leading indicator and is based on a survey of around 350 institutional investors who are asked to rate the economic outlook in Germany for the next 6 months.

The next important item on the economic calendar is in the US where we have the building permit numbers and housing start figures.  The importance of these is felt across the economy as any change has a direct, knock on effect in financial services, construction and the service industries.  The numbers indicate the number of new permits issued during the previous month and the forecast is for this to be 0.5 million against a previous of 0.53 million – therefore a small decline.  If the actual is better than forecast then this should be good news for the US dollar.  Housing are also expected to fall.

At the same time we have the PPI (producer price index) being released and this represents the changes in the prices of finished goods and services sold by producers.  The data tends to have a greater impact when released ahead of the CPI data since the reports are closely correlated.  Once again this is a leading indicator, in this case of consumer inflation, as any increase in price will be passed on directly to the end user.  The forecast is for a fall to 0.3% from last time at 0.8%. Finally alongside this release the core PPI which again are suggesting a fall from 0.4% to 0.1%.