FX Daily

* Euro area money supply data covering November are due for publication. M3 growth slowed during most of last year and the consensus expectation is for a low reading of 1.5% y/y. While the European economy is recovering, low credit growth remains a concern and together with low inflation should keep the window open for the ECB to ease monetary policy further.

* Spanish and Italian December flash HICP figures are released ahead of the euro inflation number next week, which we expect will decline mainly as a result of a decline in German inflation, see German inflation set to fall to 0.9% in December. Spanish inflation is expected to remain unchanged at 0.3% reflecting higher core inflation and lower energy and food inflation. Italian inflation is expected to decline to 0.6% in December but there remains upside risk to Italian inflation from the VAT hike to 22% in October.

* Several FOMC speeches including an address by Chairman Bernanke tonight.