As I had anticipated CPI figures came out below expectations in Europe and Canada and did little to encourage buyers of Sterling or Canadian dollars. With Bank of England minutes to be released “on the marrow” we may see GBP/USD break key support of $2.009 and end up below $2 even by the end of the week. Meanwhile the food price index comes out in New Zealand at 4:45 pm and is important since that economy is largely agricultural. A high reading may help the RBNZ justify keeping rates right where they are. A little later on we have the Japanese all industrial activity index coming out at 6:50 pm which may help people decide their stance going into the Bank of Japan’s rate announcement tomorrow night. Also on the calendar is the Westpac Leading Index which is considered an important forward looking survey into Australian fortunes. German PPI starts the European session at 2 am followed by IFO survey at 4. Both of these figures should be market movers especially if sentiment has deteriorated in Germany, the Euro Area’s largest economy. I do expect PPI to be tame so expect further Euro selling to start the morning. Later on at 4:30 the BOE releases the minutes of its last meeting which should prove very interesting. My guess is that the minutes will show talk off needing to bail out the banks and also that the housing market is cooling and generally dovish comments all around. Like I said the minutes could prove to be the catalyst which allows the Pound to go back under $2 for the first time in months.
