Summary:

• German inflation data is the last key macro release this year
• Investors should also pay attention to Spanish inflationary readings
• The US oil producers could increase drilling activity as the crude prices remain relatively high

The last trading day of the year usually brings lower trading volume. However, today’s calendar should be quite interesting for investors. The inflation data from Europe’s biggest economy often spurs emotions. The economic recovery has accelerated significantly on the Old Continent, hence the ECB mainly focuses on inflationary aspects. 

Spanish inflation figures have just come in. Both measures missed expectations as HICP rose by 1.3% y/y (+1.5% expected) and CPI  slowed down to 1.2% y/y form 1.8% (+1.5% expected). Spain is the fourth largest economy in the eurozone, hence these prints bode ill ahead of the release for the whole block. Moreover, it could also mean that data from Germany could be lower than earlier expected. 

 Spanish data bodes ill ahead of inflation readings from other European countries. Source: Macrobond, XTB Research

1:00 pm BST – Germany, preliminary HICP and CPI figures for December. Euro has fared very well in December despite the fact that the ECB took a dovish stance at the previous meeting. Inflation is the key metric now that the economic environment is strong. The market consensus sees the CPI slowing down to 1.5% y/y form 1.8%. When it comes to HICP metric which is ECB’s favourite measure of inflation, it should come in at +1.4% y/y after a gain of 1.8% previously. Note that we get also readings from particular Lands between 8:00 am and 11:00 am BST. these figures could set the expectations ahead of the release for the whole Germany. 

6:00 pm BST – US, oil rig count. Relatively high oil prices have encouraged the US shale producers to expand their activity. It has already translated into an increase in the US supply – this factor could be the main factor halting further rally on the oil market next year.

 EURUSD has come back to its highs from November. Breaking above 1.19625 handle could pave the way towards this year peaks. Source: xStation5