somrat4030
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The Euro is continuing to suffer from the perception that the European Central Bank will not be tightening monetary policy until well after some of the other major central banks, including the US Federal Reserve and the Bank of England. Even though the markets long ago priced that in, last Wednesday's steep fall in EUR/USD after a shocking set of US inflation data suggests that the slide in the pair is far from over.
The December 16 meeting of the policymaking ECB Governing Council remains key as by then the council members will have received the revised forecasts for the Eurozone economy. Even though inflation hit a 13-year high in October at 4.1% – more than double the ECB's target of 2% in the medium term – the key question will be whether the council members will still expect it to fade in the coming months.
On the other hand, Many of the European indices were near their all-time highs last week, including the FTSE 100, the DAX 40 and the CAC 40. However, is it time for European indices to pull back? And if so, what could cause it to happen?
This week, a number of countries report inflation data, not just in Europe, but around the world. The UK dumps a load of inflation on Wednesday, as the EU releases CPI. Germany releases PPI on Friday as well. In addition, inflation information will be released from Canada, the US, and New Zealand this week. If the inflation data is as strong as that of the US, indices will likely pull back while currencies could get a boost vs the US Dollar (the US Dollar moved to 16-month highs last week).
Moreover, Oil is still in the headlines as WTI pulled back to near $80. OPEC revised down their oil demand forecast for 2022. On Friday, US President Joe Biden pleaded with OPEC to release more oil. Whether it's OPEC supplying more oil to the US or Joe Biden releasing reserves from the SPR, oil traders believe their will be more supply in the markets.
On the other hand, Kuwait crude oil fell 33 cents during Friday's trading to reach USD 82.57 per barrel (pb) Friday, compared with USD 82.90 pb the previous day, said Kuwait Petroleum Corporation (KPC) Saturday.
Brent crude fell 70 cents to reach USD 82.17 pb and West Texas Intermediate went down 80 cents to USD 80.79 pb.
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