Yesterday's session brought M3 Money Supply figures from Eurozone.The annual growth rate of the broad monetary aggregate M3 increased to 5.3% in October 2015, from 4.9% in September, averaging 5.1% in the three months up to October. No change was expected. The components of M3 showed the following developments. The annual growth rate of the narrower aggregate including currency in circulation and overnight deposits (M1) stood at 11.8% in October, compared with 11.7% in September.
However, traders are still speculating on further ECB monetary moves. In a report on the European
Central Bank (ECB),
the HSBC bank has dissected the bank’s agenda, with an inflation rise one of the biggest priorities. As inflation falls, it becomes embroiled in various formal and informal rules in pricing contracts, that are linked to future prices for inflation today, HSBC said. Even if economic recovery begins to accelerate at pace, inflation could still remain lower than 1%, if inflation expectations are dislodged.
The best means to hike inflation HSBC believe, is to push the exchange rate down, resulting in import prices being increased. In their report, HSBC opined that the cutting of the bank deposit rate would be an effective tool, in pushing the euro down. Quantitative Easing (QE) is expected to be expanded to act as a counter force to the downward pressures on the euro. The size of the asset programme may face constraints, due to the comparably small size of the German bond market, and that there is a collective action clause over new euro zone issuance.
From Eurozone, tomorrow, Spanish CPI and German Consumer Climate figures are scheduled for a release. Spanish CPI is expected to decrease by 0.5%, up from 0.7% decline last month, while German consumer climate should show fall to 9.2 points. There will be no data releases in the US session.
Figures to watch:
Spanish CPI (Friday 9:00)
GfK German Consumer Climate (Friday 13:00)
