A data-heavy end to the week

We’re seeing choppy trading as we head into the weekend amid a flurry of economic data from across Europe.

Things got underway with a plethora of PMI readings, although most were revised figures that aren’t typically subject to large revisions meaning the market impact is relatively minimal.

The euro area inflation data was always going to be this morning’s headliner and considering the market reaction, it’s been taken quite well. On the face of it, it looks like a mixed bag with the headline number hitting a new record of 8.6% – higher again than expected, while the core reading actually fell marginally to 3.7%, a positive surprise given it was expected to rise a little.

You could argue that the core number was flattered by fiscal measures in Germany, such as temporary reductions in rail fares but that was known ahead of the release which is perhaps why investors have been happy to brush off the increase in the headline number. As is the case in most parts of the world, energy and food inflation remains a major driver overall.

In terms of what this means for the ECB, the answer is probably very little. It would have taken something far more substantial for markets to price in a 50 basis point hike in a few weeks. That said, like everyone else, we’ll be paying very close attention to comments from policymakers in the interim for any indication that a super-sized lift-off is on the cards.

The US will now take us into the weekend with PMI data of its own, starting with the final S&P Global PMI – which is expected to be unchanged – and then the ISM manufacturing PMI which is widely followed. The expectation is a dip from 56.1 to 54.6 and a sharper decline could send markets into the weekend on a negative note.

A worrying weekend for bitcoin

Speaking of trouble, bitcoin is facing a challenging weekend. An 8% decline on Thursday saw it crash below USD 20,000 – a potentially hugely significant level – ​ before finding some support around USD 18,500. A rally early on Friday was quickly rejected and bitcoin has since given up the bulk of those gains to trade back around USD 19,000. That is a big double blow for bitcoin in a very short period of time which could be troublesome going into the weekend.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.