Euro remains range-locked

On to Europe and the main mover may still be sterling. Yesterday's CPI data weren't that weak, but while the market may have over-reacted, there was nothing hawkish coming from MPC testimony at the Treasury committee, and favour shorts are still seen in GBP/USD and GBP/JPY. 

Today, unemployment data is expected to show a 3,000 fall in unemployment, and a rise in the ILO measure of the unemployment rate to 5.7%, though the claimant count may stay at 2.3%. 

"Wage growth is expected to edge up to 3.1% on a 3-month y/y basis, given what the underlying y/y data have been doing. Any weakness in the data overall probably elicits a bigger reaction than strength, but on our figures, there won't be fireworks", says Societe Generale. 

The ZEW data yesterday were very weak (the auto sector index spectacularly so). Today, along with French and Spanish CPI data for September, Euro area industrial production for August is due, likely to be soggy at -0.5% m/m, or +1.9% y/y. 

"The euro remains range-locked. Not that this is any more likely than any other news to break EUR/USD out of its range. It still follows the Bund/Treasury spread, which isn't moving far. There is a bias for the euro to edge towards USD 1.1460 and a sense across the market that ECB jawboning isn't enough to get the currency down, but it'll take a catalyst for the move gather speed", added Soceite Generale. 

If words aren't enough, then ECB action may not be forthcoming very quickly. EUR/USD may need to get back above 1.20 before the ECB acts really aggressively. All of this will be immaterial today though, if the US retail sales data are robust. They should be given solid real income growth.