The Euro should Ignore Today’s IFO Data

Points to consider with the euro:

• The euro should ignore today’ German IFO business confidence survey.
• The financial markets are still trying to comprehend the new US fiscal policy.
• This morning, the yen correct higher and the Australian Dollar fell lower after a poor Q4 CPI data release.

Today’s economic calendar in Europe is fairly quiet. Germany will release its IFO business confidence survey a bit later this morning. The release is expected to show that business sentiment has risen to its highest level since July 2011. However, this IFO report, upbeat or not, will offer the euro very little support.

The European Central Bank (ECB) does not really look at this survey to set policy trends. The ECB appears to be locked in a wait-and-see mode as it is still monitoring its December stimulus and strategy update.

Euro Investors are still Eying US Fiscal Policy

There is also the new fiscal policy on the table with the new US Presidential administration. Investors are still looking for anything that will cast a shadow on the outlook of his fiscal policy and its direction. The scares details has led, somewhat, to the unwinding of the Trump Trade, as it has been dubbed. There has been a vacuum of details since his inauguration last Friday. However, the path of least resistance for the global financial markets remains higher as any tweet or headline from UD President Donald Trump causes spontaneous volatility.

This morning the USD/JPY Forex market fell as the yen outperformed. The yen raised against all its major G-10 counterparts after the currency’s underperformance the day prior. The Canadian Dollar also moved higher as it tracked the rising price of crude oil. The Australian Dollar slipped this morning after the headline inflation number for the final quarter of 2016 came in worse-than-expected.