Focus Turns To German Ifo And UK GDP

The euro and swiss franc remain the strongest currency this week, even though they just pared some gains against the greenback in consolidation. Dollar index continues to defend 79 level but looks vulnerable. S&P 500 rose mildly to close at 1752.07 overnight, not far from the record close of 1754.67 made on Tuesday. The brief retreat in risk sentiments might be over and we'd probably see renewed buying in stocks and selling in the greenback before the week closes. Nonetheless, European majors and the greenback will have to go through a string of tests from economic data today first.

The German Ifo business climate will be the first focus in European session. The main business climate index is expected to rise for a sixth month in October to 108.0. Expectations gauge is expected to rise slightly to 104.5 while current assessment gauge is expected to be unchanged at 111.4. The EUR/USD is struggling to stand firm above 1.38 for the moment as the rally was limited by yesterday's weaker than expected PMIs. Today's data would be important to determine whether the common currency would extend the rally in near term or top temporarily at the current level.

Another major focus in European session is on UK Q3 GDP which is expected to grow 0.8% qoq, an acceleration from Q2's 0.7% qoq. That reading, if meets estimates, would be the highest number in three years. BoE governor Carney said yesterday that "the message to households, to businesses, is that the recovery has obviously begun, it is strengthening, but we are not going to withdraw monetary stimulus until it's really gained that traction."

Elsewhere, Japan national CPI core moderated slightly to 0.7% yoy in September while Tokyo CPI core accelerated to 0.3% yoy in October. Corporate service price index rose to 0.7% yoy in September. The US will release durable goods orders for September, and are expected to grow 2.0% with ex-transport orders up 0.5%.