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Forex Analysis: Euro Up on Greece Hopes, Aussie Sold Before RBA Meet

By , Currency Strategist
03 December 2012 08:05 GMT

The Euro gained on hopes Greece was closer to firmly securing bailout cash as Athens initiated a debt buyback. The Aussie fell on RBA rate cut bets.

Talking Points

  • Australian Dollar Sinks on Swelling RBA Rate Cut Expectations
  • Euro Outperforms as EZ FinMins Meet, Greece Begins Buyback
  • UK, Eurozone Manufacturing PMIs in Focus on the Data Docket

The Australian Dollar underperformed in overnight trade as forex traders looked ahead to tomorrow’s RBA interest rate decision. Priced-in expectations point to a 92 percent probability of a 25bps rate cut. The Euro proved strongest at the start of the trading week as Eurozone finance ministers prepared to gather in Brussels once again. The spotlight is on a Greek debt buyback, the successful outcome of which is critical securing the continued flow of bailout funds. For its part, the Athens offered to repurchase €10 billion of its outstanding debt today.

On the economic data front, the final revision of November’s Eurozone Manufacturing PMI reading is expected to confirm a print at 46.2, showing factor-sector activity shank for a 16th consecutive month (albeit at a slower pace than in October). A significant downward revision may undermine Euro buoyancy as traders reconsider the possibility of a dovish turn at this week’s ECB policy meeting. UK Manufacturing PMI is also on tap, with forecast calling for a slight nudge higher to 48.0 in November from 47.5 in the prior month. Absent an unexpected push lower, the result is unlikely to yield a lasting impact on price action given its limited scope to nudge BOE policy expectations ahead of this week’s MPC sit-down.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Terms of Trade Index (QoQ) (3Q)

-3.2%

-1.5%

-2.6% (R-)

22:30

AUD

AiG Performance of Manufacturing Index (NOV)

43.6

-

45.2

23:30

AUD

TD Securities Inflation (MoM) (NOV)

-0.1%

-

0.1%

23:30

AUD

TD Securities Inflation (YoY) (NOV)

2.5%

-

2.4%

23:30

AUD

RPData-Rismark House PX Actual (NOV)

0.0%

-

-1.0%

23:50

JPY

Capital Spending (3Q)

2.2%

4.4%

7.7%

23:50

JPY

Capital Spending excl Software(3Q)

2.4%

1.0%

6.6%

23:50

JPY

Loans & Discounts Corp (YoY) (OCT)

0.26%

-

0.25%

0:01

GBP

Lloyds Business Barometer (NOV)

17

-

17

0:01

GBP

Hometrack Housing Survey (MoM) (NOV)

-0.1%

-

-0.1%

0:01

GBP

Hometrack Housing Survey (YoY) (NOV)

-0.3%

-

-0.4%

0:30

AUD

Company Operating Profit (QoQ) (3Q)

-2.9%

-3.0%

-0.3% (R+)

0:30

AUD

Inventories (3Q)

1.1%

0.4%

0.3% (R-)

0:30

AUD

Retail Sales s.a. (MoM) (OCT)

0.0%

0.4%

0.5%

0:30

AUD

ANZ Job Advertisements (MoM) (NOV)

-2.9%

-

-4.6%

1:00

CNY

Non-manufacturing PMI (NOV)

55.6

-

55.5

1:45

CNY

HSBC Manufacturing PMI (NOV)

50.5

50.4

49.5

5:00

JPY

Vehicle Sales (YoY) (NOV)

-3.3%

-

-9.0%

5:30

AUD

RBA Commodity Index SDR (YoY) (NOV)

-11.6%

-

-16.2% (R-)

5:30

AUD

RBA Commodity Price Index (NOV)

87.0

-

87.2 (R-)

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:15

CHF

Retail SalesReal (YoY) (OCT)

3.8%

5.4%

Medium

8:30

CHF

SVME Manufacturing PMI (NOV)

47

46.1

Medium

8:45

EUR

Italian PMI Manufacturing (NOV)

46.0

45.5

Low

8:50

EUR

French PMI Manufacturing (NOV F)

44.7

44.7

Low

8:55

EUR

German PMI Manufacturing (NOV F)

46.8

46.8

Medium

9:00

EUR

Euro-Zone PMI Manufacturing (NOV F)

46.2

46.2

Medium

9:30

GBP

PMI Manufacturing (NOV)

48.0

47.5

Medium

16:00

EUR

Italian Budget Balance (NOV)

-

-13.1B

Low

16:00

EUR

Italian Budget Balance YTD (NOV)

-

-58.5B

Low

16:00

EUR

Eurozone Finance Ministers Meet in Brussels

-

-

High

17:00

EUR

Italian New Car Registrations (YoY) (NOV)

-

-12.39%

Low

Critical Levels **

CCY

SUPPORT

RESISTANCE

EURUSD

1.2960

1.3114

GBPUSD

1.5980

1.6096

** Intraday support and resistance levels are derived from Pivot Points

--- 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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03 December 2012 08:05 GMT