January US CPI and Eurozone GDP Q4 2017 in the spotlight

Wednesday 14th February 2018 will be a day full of macroeconomic data releases coming from both sides of the Atlantic Ocean. The busy day starts with the Statistisches Bundesamt Deutschland publishing Germany’s January 2018 Consumer Price Index (CPI) data and preliminary Gross Domestic Product (GDP) data for the fourth quarter (Q4) of 2017. Economists forecast that January’s 2018 Harmonised Consumer Price Index in Germany stood at 1.4%, on a year-to-year basis. Regarding the German GDP growth in the last quarter of 2017, analysts anticipate a 0.6% surge, on a quarterly basis. In Italy, the National Institute of Statistics is going to publish the country’s GDP preliminary data for the fourth quarter of 2017. The consensus among economists is that the Italian GDP grew by 1.7% during the last quarter of 2017, on an annualised basis.

Eurozone preliminary Q4 GDP data

The most important release for Europe is the preliminary Q4 GDP data for the whole Eurozone. Economists expect that the Euro-bloc’s GDP increased by 0.6%, on a quarter-on-quarter basis. On an annualised basis, market analysts forecast that the Eurozone’s GDP grew by 2.7%, 0.1% higher than the 2.6% figure recorded in the third quarter of 2017. The expansionary monetary policy by the European Central Bank (ECB), the improving labour market and growing export markets seem to strengthen domestic demand. According to Eurostat’s GDP preliminary flash estimate report, published on 30th January 2018, the bloc’s economy has grown by 2.5% over the whole year 2017, which is one of the highest readings recorded since 2007.

January 2018 US Inflation

In the US, the Department of Labour Statistics has scheduled to publish January’s 2018 inflation data. Economists forecast that US inflation stood at 1.9% in January 2018, on an annualised basis. If their forecasts prove accurate, the figure will be 0.2% lower than December’s 2017 rate as it was published on 12th January 2018. Inflation in January 2018, excluding food and energy prices, is expected to come in at 1.7%, which would be 0.1% lower than in December 2017. In general, a high inflation figure is seen as positive for the US Dollar because it could spark discussion about a probable interest rate hike by the Federal Open Market Committee (FOMC) of the US Federal Reserve. On the contrary, a low inflation reading is likely to be negative for the US Dollar.

The Federal Reserve set a 2% inflation target back in January 2012. Since then, US inflation has come in below that level for 66 out of 72 months. According to a Bloomberg report published on 2nd February 2018, some of the Federal Reserve’s board members have the opinion that the inflation target should be re-evaluated as the current monetary policy gives little space for countermoves, in case a new financial crisis hits the US economy.

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