DailyFX Economic Release Alerts For 09-22-2006
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1. French Business Confidence
2. German CPI
3. <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US Housing Data
German CPI (SEP) (05:00 GMT; 01:00 EST)
Consensus: -0.3%
Previous: -0.1%
Outlook: Consumer Prices for the month of September are expected to fall to -0.3% versus -0.5% in July as the lagged effects of recent rate hikes begin to take effect. Lower energy prices and the fact that last year's tobacco tax hike falls out of the equation may further contribute to the expected inflation slowdown. Oil prices are significantly down in mid-September versus mid-August due to seasonal fluctuations and a cooling of the international geopolitical landscape and, as such, prices should have room to normalize. However, underlying inflation remains as producer prices are reaching record highs. Likewise, the 3% Value Added Tax hike planned for next year will lead to a future rise in consumer prices and may call for still further tightening by the ECB.
Previous: Headline inflation inEuropes largest economy declined 0.1% in August as late declines in energy costs allowed consumer prices to slow their recent inflation. Regardless, muted growth on the Consumer Price Index have come at a time when Producer input costs continue higher. This trend manifested itself in significantly lower German ZEW business confidence at a time when the ECB shows little sign of relenting in its monetary policy tightening. If this trend is to continue, manufacturing and broader industrial production growth will continue to slow as firms continue to see record high raw material prices while they are unable to pass the costs onto the consumer. Moving forward, it will be important to see that consumer prices begin to rise once more so as to improve the overall business climate.
French Business Confidence (SEP) (08:30 GMT; 04:30 EST)
Consensus: 109
Previous: 109
Outlook: September business confidence in France is likely to weaken slightly as the lagging effects of recent rate hikes are expected to manifest into economic reality in the period. A corrective bounce from previous 5 year highs also signals a slowdown as the impending 3% sales tax hike adds to inflationary fears and cuts into business confidence. Furthermore, aggressive ECB tightening has increased borrowing costs and will also weigh on optimism. A surprisingly large drop in German ZEW signals trouble for France as the ECB attempts to control inflation while avoiding a broad slowdown in economic growth.
Previous: French business confidence increased dramatically in July to the highest level seen in 5 years as consumer spending rose and an expansion in economic exports lead the way. Faster than normal growth in the Euro-Zone had previously pushed confidence higher as higher domestic demand boosted producer profit. Growth may have recently reached its peak, however, as the European Central Bank has stepped in to control inflation by increasing borrowing costs?thereby decreasing the likelihood on any substantial gains in investment and future profits.
US Housing Data (MoM) (AUG) (14:00 GMT; 10:00 EST)
See Friday, September 22, 2006 Daily Fundamentals report for more information.
