Early European trading saw the slight Euro bid-tone disappear as German inflation was downwardly revised. EUR/USD dropped back from 1.2940 to 1.2920 but bids emerged to prop the downside. Despite being a sell into strength, EUR crosses were also seen adding weight, 1.2920/40 continued to trade ahead of the Euro Zone inflation release.
However, the as expected EZ data left the market flat and as Sterling was hit by a bout of profit-taking the EUR managed to elicit some support from EUR/GBP. Offers are still seen into 1.2940/50 with stops above while on the downside bids trail back to 1.2900. Looking ahead, dealers eye the slew of US data due into North American trading.
Weekly numbers hit the screens first but the 13:30 GMT release of US December PPI is seen as the next key event-risk. Economists forecast a +0.5% headline. Following this, Redbook Retails for Jan are set for unveiling at 13:55 GMT ahead of Capital Inflow numbers at 14:00 GMT (expected at USD 77.5Bn). 14:15 GMT then sees December Industrial Production with the post European close raft of Fed speakers kicking off at 18:00 GMT.
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