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Euro, Risky Assets Look to Eurozone PMI and German IFO for Direction

By , Currency Strategist
24 May 2012 07:05 GMT

Talking Points

  • Euro, Risky Assets Look to Eurozone PMI and German IFO for Direction
  • German, UK GDP Reports Unlikely to Stir Volatility Absent Large Revisions
  • S&P 500 Stock Index Futures Point Lower, Hinting at Lingering Jitters

The major currencies consolidated in quiet overnight trade as markets digested volatility over the preceding 24 hours before a busy day of European economic data offers new catalysts. The preliminary set of May’s Eurozone PMI figures is in focus. Region-wide metrics are expected to show the manufacturing and services sectors shrank for the fourth consecutive month, with the pace of contractions slightly accelerating from April. Separately, the German IFO business confidence survey is forecast to show sentiment soured in May after printing flat in the prior month.

Markets will look to the outcomes to gauge the degree of regional slowdown, establishing the extent to which it can sabotage deficit-reduction efforts and amplify credit-market stress. After yesterday’s lackluster EU leaders’ summit – which delivered little besides showing surface-level support for keeping Greece within the Eurozone and exposing familiar disagreement on jointly-issued “Eurobonds” – the outcomes may prove decisive in setting the trajectory of the Euro as well as risk-linked currencies until the second Greek election in mid-June.

Elsewhere on the docket, updated first-quarter German GDP numbers are also on tap, with the by-component breakdown due to be unveiled. The report seems likely to pass with little fanfare absent particularly sharp deviations from previously seen results. Revised UK GDP figures for the same period will probably follow a similar dynamic. On the sentiment front, S&P 500 stock index futures are pointing narrowly lower, hinting at lingering jitters across financial markets

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Trade Balance (NZ$)

355M

400M

186M (R+)

22:45

NZD

Exports (NZ$)

3.89B

4.10B

4.21B (R-)

22:45

NZD

Imports (NZ$)

3.53B

3.70B

4.02B (R-)

22:45

NZD

Trade Balance YTD (NZ$)

-541M

-651M

262M (R+)

1:00

AUD

CBAHIA House Affordability

61.8

-

58.5

2:30

CNY

HSBC Flash China Manufacturing PMI

48.7

-

49.3

5:00

JPY

BOJ Monthly Economic Report

-

-

-

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German GDP n.s.a. (YoY) (1Q F)

1.7%

1.7%

Medium

6:00

EUR

German GDP w.d.a. (YoY) (1Q F)

1.2%

1.2%

Medium

6:00

EUR

German GDP s.a. (QoQ) (1Q F)

0.5%

0.5%

Medium

6:00

EUR

German Exports (1Q)

0.9%

-0.8%

Low

6:00

EUR

German Imports (1Q)

0.3%

-0.3%

Low

6:00

EUR

German Domestic Demand (1Q)

0.0%

0.1%

Low

6:00

EUR

German Capital Investment (1Q)

-0.3%

1.1%

Low

6:00

EUR

German Government Spending (1Q)

0.3%

0.1%

Low

6:00

EUR

German Construction Investment (1Q)

-0.4%

1.9%

Low

6:00

EUR

German Private Consumption (1Q)

0.2%

-0.2%

Low

6:00

CHF

Trade Balance (CHF) (APR)

1.90B

1.58B

Medium

6:00

CHF

Imports (MoM) (APR)

-

4.6%

Low

6:00

CHF

Exports (MoM) (APR)

0.2%

-2.5%

Low

6:45

EUR

France Production Outlook Indicator (MAY)

-

-14

Low

6:45

EUR

France Own-Company Production Outlook (MAY)

-

-4

Low

6:45

EUR

France Business Confidence Indicator (MAY)

94

95

Low

7:00

EUR

French PMI Manufacturing (MAY P)

47.0

46.9

Medium

7:00

EUR

French PMI Services (MAY P)

45.7

45.2

Medium

7:30

EUR

German PMI Manufacturing (MAY P)

47.0

46.2

High

7:30

EUR

German PMI Services (MAY P)

52.0

52.2

High

8:00

EUR

Euro-Zone PMI Composite (MAY P)

46.6

46.7

High

8:00

EUR

Euro-Zone PMI Manufacturing (MAY P)

46.0

45.9

High

8:00

EUR

Euro-Zone PMI Services (MAY P)

46.7

46.9

High

8:00

EUR

German IFO – Business Climate (MAY)

109.4

109.9

Medium

8:00

EUR

German IFO – Expectations (MAY)

102.0

102.7

Medium

8:00

EUR

German IFO – Current Assessment (MAY)

117.1

117.5

Medium

8:30

GBP

BBA Loans for House Purchase (APR)

32000

31888

Low

8:30

GBP

Gross Domestic Product (QoQ) (1Q P)

-0.2%

-0.2%

Medium

8:30

GBP

Gross Domestic Product (YoY) (1Q P)

0.0%

0.0%

Medium

8:30

GBP

Private Consumption (1Q P)

0.3%

0.4%

Low

8:30

GBP

Gross Fixed Capital Formation (1Q P)

-0.5%

-0.6%

Low

8:30

GBP

Government Spending (1Q P)

0.0%

0.5%

Low

8:30

GBP

Exports (1Q P)

-0.3%

1.6%

Low

8:30

GBP

Imports (1Q P)

0.1%

0.9%

Low

8:30

GBP

Total Business Investment (QoQ) (1Q E)

-1.0%

-3.3%

Low

8:30

GBP

Total Business Investment (YoY) (1Q E)

9.2%

1.6%

Low

8:30

GBP

Index of Services (MoM) (MAR)

0.3%

-0.4%

Low

8:30

GBP

Index of Services (3M/3M) (MAR)

0.2%

0.2%

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2461

1.2666

GBPUSD

1.5618

1.5750

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

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24 May 2012 07:05 GMT