Week Ahead: Economic Indicators (EU)

Hey, Traders!
For the December 9th week, here is a list of the major economic indicators being released during the EU Session, with a brief synopsis of what they represent and what to possibly expect from the markets in reaction.

Tuesday 10th December
02:00 ET
German HICP
The Harmonised Index of Consumer Prices is an index of consumer prices, on the basis of a statistical methodology that has been harmonised across all EU member states.
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households in Germany.

What to expect:
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

German CPI
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households.

What to expect:
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

Thursday 12th December
03:30 ET
Swiss Interest Rate
Swiss National Bank (SNB) governing board members come to a consensus on where to set the target range for the rate. Traders watch interest rate changes closely, as short-term interest rates are the primary factor in currency valuation.

What to expect:
Could have an effect on businesses for the sudden change in the cost of credit on their corporate balance. Consumers could also be affected since the shifts in monetary policy influence other short-term rates like bank deposits, personal loans, credit cards, home equity loans, and adjustable-rate mortgages. Higher rates might make banks more reluctant to borrow overnight funds, so they might lend out less money or charge businesses and consumers a higher rate to offset the rates.

Hong Kong PPI
The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.

What to expect:
A higher than expected reading should be taken as positive/bullish for the CNY, while a lower than expected reading should be taken as negative/bearish for the CNY.

08:15 ET
ECB Interest Rate
The European Central Bank (ECB) sets monetary policy for all members of the Eurozone. The highest decision-making body is the Governing Council which comprises the six members of the Executive Board and the 19 presidents of member central banks. Policy meetings take place roughly every six weeks, but, due to the sheer number of participants, a rotation system has been introduced so that the total number of votes is capped at twenty-one.
The most traditional operations are what we call the Main Refinancing Operations (MRO). When liquidity is needed, a bank can borrow directly from the ECB. Every week, banks of the Eurozone go (virtually) to the ECB desk to borrow money at the refinancing rate fixed by the ECB. The loan is made under the form of a Repurchase Operation (Repo). The bank sells security assets to the ECB and borrows money. One week later, the bank gives the money back with interest to the ECB and recovers its security assets.

What to expect:
The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, few homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the stock market, while lower interest rates are bullish.

Friday 13th December
02:00 ET
UK GDP Estimate
Gross Domestic Product (GDP) measures the total value of a country’s industrial output over a given period. It consists of the aggregate domestic production of goods and services by individuals, businesses, and government. Quarterly publications provide a much more detailed picture of the economy than the monthly indicators, covering all of gross domestic product (GDP), sector accounts, business investment, balance of payments, consumer trends, and profitability of UK companies.

What to expect:
GDP is a leading indicator of UK economic health. High levels of GDP growth are viewed as being positive for UK indices as well as the GBP. 

UK Manufacturing Production
Manufacturing Production measures the change in the total inflation-adjusted value of output produced by manufacturers. Manufacturing accounts for approximately 80% of overall Industrial Production.

What to expect:
A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP.

02:45 ET
French HICP
The Harmonised Index of Consumer Prices is an index of consumer prices, on the basis of a statistical methodology that has been harmonised across all EU member states.
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households in France.

What to expect:
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

French CPI
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households.

What to expect:
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.