Daily Report
Dollar is set to end the week with on a weak note as economists pared back expectations on Fed's rate hike due to low inflation. According to WSJ survey, some economists expected that Fed could wait until September before hiking interest rate. Also, the analysts are seeing the federal funds rate at 1.5% in June next year and 2.2% by the end of 2016, slightly down from prior expectations. The dollar index faced some resistance ahead of 95.48 high and retreated. The development suggests that recent consolidation would likely extend for a while before up trend resumption.
In Eurozone, ECB extended another EUR 5b in emergency loans to Greek banks. ECB governing council member Ewald Nowotny said that Greek banks would still get support from ECB even if Greece fails to agree on the bailout program with creditors. ECB governing council member Jens Weidmann said that policy markers are seeing a "disinflationary process" but not a "deflationary spiral of decreasing prices and wages." He noted that the "risk of self-reinforcing deflation is still considered to be very low." Released from Eurozone, French GDP grew 0.1% qoq in Q4, inline with expectation. German GDP grew 0.7% qoq in Q4, much better than expectation of 0.3% qoq.
Looking ahead, Swiss will release PPI in European session. Italy and Eurozone will release GDP. UK will release construction output. US will release import price index and U of Michigan sentiment. Canada will release manufacturing shipments.