· EUR French Consumer spending stronger than expected <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
· EUR <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Industrial Orders beat forecast
· GBP CBI Industrial Trends
· USD LEI forecast to be positive
The EURUSD was the star of the show in overnight trade, as the pair took out the 1.3000 barrier powered by surprisingly strong consumer and producer data from the Euro-zone. French consumer spending registered a very strong gain of 1.3% versus expectations of only 0.3% improvement. The surge in spending was led by a 2.0% jump in car sales a sharp contrast with a -1% drop the month prior. Sales in the retail sector also contributed significantly rising 1.2% for the month. Tonights news bodes well for French Q4 consumption and confirms French FinMin Thierry Brettons recent upbeat assessment of EZs second largest economy.
Additionally EZ New Industrial Orders also registered a better than expected gain printing at 1.4% on month over month basis - better than 1.0% projected. Furthermore, revisions for the month prior were also adjusted higher. Overall, the data was quite supportive to euro indicating that demand in the Industrial sector remains healthy and should continue to fuel growth in the region. The only caveat to tonights news is that the Industrial Orders data is relatively dated as it records only November's results and may not properly reflect current demand conditions under higher exchange rates regime. Nevertheless, the news was net positive for the EURUSD especially in light of the fact that the Conference Board reported that US productivity is at its lowest level in a decade and the EZ numbers actually exceed it.
In UKthe news from CBI Industrial Trends survey was mixed as total orders dropped but exports rose, however the price expectations component surged to +19 from +8, highlighting the Bank of Englands inflation concerns. Cable traders focused far more on the inflation implications of the report with many market players now speculating that BoE may raise rates yet another 25bp by March. GBPUSD convincingly took out the 1.9770 level reaching highs not seen since 1992 and now appears to be headed for a challenge of the psychologically important 2.000 figure.
