Top Concerns for Euro
Greece
Greece’s cabinet is now considering even more strict austerity measures to appease the IMF, ECB and European Commission. It is now considered fact that Greece with get the next bailout payment from its first bailout and a second bailout will be coming soon. The IMF is still planning on holding back its $3.3 Billion Euro part of the bailout installment unless the Euro group can come up with a plan for Greece to close its budget gap for 2012.
Greek Prime Minister George Papandreou will establish an agency to accelerate the asset-sale schedule of public properties and make significant cuts in public sector employment. These are part of strict conditionality placed on additional financing from the Eurogroup.
Ireland
Ireland has stayed out of the headlines for the most part in the past few days but they have been warning that they will also need a second bailout to stay afloat.
Portugal
The bailout for Portugal has been approved by the ECB and IMF. The current concern for Portugal is instead about election results. There are concerns about whether the elected party will have enough sway with parliament to be able to enact the strict austerity, privatization and economic reforms required by the ECB and IMF.
Monday 0500 EDT, European Monetary Union Producer Price Index
PPI is a measure the the price for goods and services required by producers. Most of the time the increased costs are passed on to the consumer therefore this has some predictive quality for inflation. When PPI is higher it increases the chance that other measures of inflation will be higher and therefore the European Central Bank will raise rates. Lower PPI made lead to falling prices which will most likely lead to economic slowdown. The Euro-zone PPI excludes construction due to seasonal volatility that can distort this indicator.
The Year-over-Year figure is expected to drop by 0.1% from 6.7%.
Tuesday 0500 EDT, Euro Zone Retail Sales
This figure covers all goods and services sold at retail stores in the Euro Zone. An increase shows growing consumer consumption and therefore may also show growing consumer confidence. The higher the number the better for economic growth but it may also lead to inflationary pressures. This is expressed as a percentage change.
The Year-over-Year figure is expected to increase to 0.0% from -1.7%.
Wednesday 0500 EDT, European Monetary Union Gross Domestic Product
GDP is a measure of total goods and services produced. GDP is usually well estimated because its components are released before it is but due to its importance it will still move markets especially if different than expected. Good GDP growth is very bullish for the economies it covers.
Quarter-over-Quarter and Year-over-Year are expected to hold steady at 0.8% and 2.5% respectively.
Thursday 0745 EDT, European Central Bank Rate Decision
The decision to raise or lower rates will greatly influence the markets while holding the rate the same as expected will generally be a non-event. Increasing the rate raises the yield you will get holding the currency and shows the European Central Bank has great confidence in the economy.
Current rate is 1.25% with the expectation that the ECB will raise rates again sometime this year but with the Greek deal coming up they may choose to hold rates the same.
Friday 0200 EDT, German Consumer Price Index
CPI is a measure of the cost of living and inflation by measuring the change in price of consumer items. An increase in CPI decreases the purchasing power of consumers because they have to pay more for the things they buy. German CPI is an important indicator of inflation for Germany and the Euro Zone since Germany is one of the Euro Zone’s largest economies.
CPI is expected to hold steady at 2.3% (YoY)