Euro May Rise on CPI Pickup, Dollar Looks to Data for QE Cues
The Euro may extend gains as a pickup in inflation weighs against ECB stimulus bets. The Dollar continues to interpret US news-flow in terms of QE cutback expectations.
Talking Points
Euro May Rise if CPI Acceleration Weighs Against ECB Stimulus Expectations
US Dollar Continues to View News-flow Through the Prism of Fed QE Outlook
NZ Dollar Outperforms in Asia Amid Signs of Resilience to Strong Currency
The preliminary set of May’s Eurozone CPI figures headlines the calendar in European hours. Expectations call for the year-on-year inflation rate to rise to 1.4 percent, marking the first increase in eight months. An upside surprise that echoes analogous German data released earlier in the week may weigh against expectations for a near-term expansion of ECB stimulus efforts and boost the Euro.
Later in the day, the spotlight turns to US Personal Income and Spending numbers as well as the Chicago PMI survey and the final revision of May’s University of Michigan Consumer Confidence gauge. Traders will continue to view US economic news-flow through the prism of Fed policy expectations, with stronger results likely to boost bets on a tapering of monthly QE purchases in the relatively near term. Such an outcome is likely to boost the US Dollar, while soft figures stand to produce the opposite effect.
Currency markets were in consolidation mode overnight, with the majors little changed as traders digested the swell in volatility over the past week. The New Zealand Dollar proved best-supported on the session, adding as much as 0.4 percent on average against its top counterparts, on the back of encouraging economic data.
The Terms of Trade Index unexpectedly jumped 4.1 percent in the first quarter, marking the largest increase in three years, while the ANZ gauge of Business Confidence advanced to the highest level since July 2011. Taken together, the results pointed to resilience in the face of a strong exchange rate that has threatened to undermine growth in an economy where exports account for close to 30 percent of GDP.
Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index
Asia Session:
GMT | CCY | EVENT | ACT | EXP | PREV |
22:45 | NZD | Terms of Trade Index (QoQ) (1Q) | 4.1% | 1.5% | -1.2% |
23:01 | GBP | GfK Consumer Confidence Survey (MAY) | -22 | -26 | -27 |
23:15 | JPY | Nomura/JMMA Manufacturing PMI (MAY) | 51.5 | - | 51.1 |
23:30 | JPY | Household Spending (YoY) (APR) | 1.5% | 3.0% | 5.2% |
23:30 | JPY | Job-To-Applicant Ratio (APR) | 0.89 | 0.87 | 0.86 |
23:30 | JPY | Jobless Rate (APR) | 4.1% | 4.1% | 4.1% |
23:30 | JPY | National CPI (YoY) (APR) | -0.7% | -0.7% | -0.9% |
23:30 | JPY | National CPI Ex-Fresh Food (YoY) (APR) | -0.4% | -0.4% | -0.5% |
23:30 | JPY | National CPI Ex Food, Energy (YoY) (APR) | -0.6% | -0.7% | -0.8% |
23:30 | JPY | Tokyo CPI (YoY) (MAY) | -0.2% | -0.4% | -0.7% |
23:30 | JPY | Tokyo CPI Ex-Fresh Food (YoY) (MAY) | 0.1% | -0.2% | -0.3% |
23:30 | JPY | Tokyo CPI Ex Food, Energy (YoY) (MAY) | -0.3% | -0.7% | -0.7% |
23:50 | JPY | Industrial Production (MoM) (APR P) | 1.7% | 0.6% | 0.9% |
23:50 | JPY | Industrial Production (YoY) (APR P) | -2.3% | -3.4% | -6.7% |
1:00 | NZD | ANZ Business Confidence (MAY) | 41.8 | - | 32.3 |
1:00 | NZD | ANZ Activity Outlook (MAY) | 34.3 | - | 30.3 |
1:30 | AUD | Private Sector Credit (MoM) (APR) | 0.3% | 0.3% | 0.2% |
1:30 | AUD | Private Sector Credit (YoY) (APR) | 3.1% | 3.0% | 3.2% |
1:35 | CNY | MNI Business Sentiment Indicator (MAY) | 56.7 | 57.1 | 58.5 |
3:00 | NZD | Money Supply M3 (YoY) (APR) | 6.5% | - | 7.0% |
4:00 | JPY | Vehicle Production (YoY) (APR) | -6.5% | - | -16.4% |
5:00 | JPY | Housing Starts (YoY) (APR) | 5.8% | 4.1% | 7.3% |
5:00 | JPY | Construction Orders (YoY) (APR) | 2.0% | - | -3.4% |
5:00 | JPY | Annualized Housing Starts (APR) | 0.939M | 0.923M | 0.904M |
Euro Session:
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
6:00 | EUR | German Retail Sales (MoM) (APR) | -0.4% (A) | -0.1% | Medium |
6:00 | EUR | German Retail Sales (YoY) (APR) | 1.8% (A) | -2.5% | Medium |
7:00 | CHF | KOF Swiss Leading Indicator (APR) | 1.07 | 1.02 | Medium |
8:00 | EUR | Italian Unemployment Rate s.a. (APR P) | 11.6% | 11.5% | Low |
8:00 | EUR | Italian Unemployment Rate s.a. (1Q) | 11.6% | 11.2% | Low |
8:30 | GBP | Net Consumer Credit (APR) | 0.4B | 0.5B | Low |
8:30 | GBP | Net Lending Sec. on Dwellin (APR) | 0.5B | 0.4B | Low |
8:30 | GBP | Mortgage Approvals (APR) | 54.6K | 53.5K | Medium |
8:30 | GBP | M4 Money Supply (MoM) (APR) | - | -0.9% | Low |
8:30 | GBP | M4 Money Supply (YoY) (APR) | - | 0.3% | Low |
8:30 | GBP | M4 Ex IOFCs 3M Annualised (APR) | 3.3% | 4.6% | Low |
9:00 | EUR | Euro-Zone CPI Estimate (YoY) (MAY) | 1.4% | 1.2% | High |
9:00 | EUR | Euro-Zone CPI - Core (YoY) (MAY A) | 1.1% | 1.0% | Medium |
9:00 | EUR | Euro-Zone Unemployment Rate (APR) | 12.2% | 12.1% | Medium |
Critical Levels:
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.2969 | 1.3096 |
GBPUSD | 1.5149 | 1.5275 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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