The Japanese Yen is likely to rise amid returning risk aversion if April’s US Consumer Confidence data falls short of economists’ expectations.

Talking Points

• Euro Sold as Disappointing German, EZ Data Boosts ECB Rate Cut Bets

• Yen May Rise if US Consumer Confidence Reports Falls Short of Forecasts

The Euro is narrowly underperforming in otherwise quietearly European trading hours as disappointing economic data bolsters interest rate cut expectations ahead of the ECB monetary policy announcement later in the week. April’s German Unemployment report showed the economy shed 4,000 jobs compared with a 2,000 increase expected by forecasters. Meanwhile, Eurozone CPI data unexpectedly put the year-on-year inflation rate at 1.2 percent, the lowest since February 2010.

Looking ahead, the spotlight is on US Consumer Confidence figures. Expectations call for a narrow increase to 61.0 in April compared with 59.7 in the prior month. US economic news-flow has increasingly underperformed relative to expectations since late March however, hinting analysts continue to underestimate the degree of slowdown playing out in the world’s top economy and opening the door for a downside surprise. Such an outcome may weigh on risk appetite, punishing cycle-sensitive currencies including the Australian, Canadian and New Zealand Dollars while boosting the Japanese Yen.

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