German CPI, ADP report(2016.03.30)
The day starts out with the CPI for March several of the German states, followed later in the day by the CPI for Germany as a whole. The first state to announce its figures is always Saxony. While of course this figure in itself is not so important, it is a pretty good indicator of what the CPI for the country is going to do. Since the beginning of 2009, the two have moved in the same direction 74% of the time. And the change in the German CPI in turn is a pretty good indicator for what the EU harmonized CPI overall (which comes out tomorrow) is going to do. Since the beginning of 2009, the two have moved in the same direction 69% of the time. So that focuses a lot of attention on the Saxony CPI, even though in fact since 2009 the change in the Saxony CPI has predicted the direction of the change in the Eurozone CPI 56% of the time, only a little better than what you’d expect by flipping a coin. In any event, the market is looking Germany to exit deflation, which could be mildly EUR-positive.
In between the time the Saxony CPI comes out and the German CPI comes out, the final reading on EU consumer sentiment is announced. While this is an important indicator, the final reading has recently been the same as the initial reading and so no market impact is likely.
Later in the day comes the feature event, the Automatic Data Processing Inc. (ADP) reporton payrolls. While this is not that great a predictor of Friday’s nonfarm payrolls, it’s the best we have, and is closely watched as a result. A figure around where the market expects would probably confirm that the US labour market remains healthy and should therefore support the dollar.
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