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Forex: Euro May Weaken Further as Soft CPI Boosts ECB Easing Bets

By , Currency Strategist
30 August 2013 07:10 GMT

Talking Points

  • Euro May Decline if Soft Flash CPI Print Boosts ECB Stimulus Expectations
  • Dollar Looks to Read US News-Flow in Terms of Fed QE “Taper” Outlook
  • Aussie, NZ Dollars Rise as S&P 500 Futures Point to Risk Appetite Recovery

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Augusts’ preliminary Eurozone CPI figure headlines the calendar in European hours. Expectations call for the year-on-year inflation rate to slow to 1.4 percent, the lowest in three months. The Euro continues to track relative monetary policy expectations (as implied by the EU-US 2 year bond yield spread). With that in mind, a soft print may be seen as amplifying the case for additional ECB stimulus and weigh on the single currency.

Later in the day, the spotlight shifts to the US data docket. July’s Personal Income and Spending metrics as well as Augusts’ Chicago PMI and revised University of Michigan Consumer Confidence releases are on tap.The resultsare likely to be interpreted in terms of its implications for the Fed’s move to “taper” QE asset purchases.With that in mind, a strong showing stands to boost the US Dollar while disappointing results will probably produce the opposite result.

The sentiment-geared Australian and New Zealand Dollars narrowly outperformed in otherwise quiet overnight trade as S&P 500 futures advanced, pointing to firming risk appetite. The Japanese Yen likewise rose as the Nikkei 225 benchmark stock index declined, dragged downward by energy and basic materials sectors. The news-wires chalked up the move to receding fears of an imminent Western intervention in the Syria.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:05

GBP

GfK Consumer Confidence Survey

-13

-14

-16

23:15

JPY

Nomura/JMMA Manufacturing PMI (AUG)

52.2

-

50.7

23:30

JPY

Household Spending (YoY) (JUL)

0.1%

0.3%

-0.4%

23:30

JPY

Jobless Rate (JUL)

3.8%

3.9%

3.9%

23:30

JPY

Job-To-Applicant Ratio

0.94

0.93

0.92

23:30

JPY

National CPI (YoY) (JUL)

0.7%

0.7%

0.2%

23:30

JPY

National CPI Ex-Fresh Food (YoY) (JUL)

0.7%

0.6%

0.4%

23:30

JPY

National CPI Ex Food, Energy (YoY) (JUL)

-0.1%

-0.2%

-0.2%

23:30

JPY

Tokyo CPI (YoY) (JUL)

0.5%

0.5%

0.4%

23:30

JPY

Tokyo CPI Ex-Fresh Food (YoY) (JUL)

0.4%

0.4%

0.3%

23:30

JPY

Tokyo CPI Ex Food, Energy (YoY) (JUL)

-0.4%

-0.3%

-0.4%

23:50

JPY

Industrial Production (YoY)

1.6%

1.8%

-4.6%

23:50

JPY

Industrial Production (MoM)

3.2%

3.6%

-3.1%

1:30

AUD

Private Sector Credit (YoY)

3.2%

3.1%

3.1%

1:30

AUD

Private Sector Credit (MoM)

0.4%

0.4%

0.4%

1:45

CNY

MNI August Business Sentiment Indicator

58.0

-

53.4

3:00

NZD

Money Supply M3 (YoY)

4.9%

-

6.2%

4:00

JPY

Vehicle Production (YoY)

-1.5%

-

-10.0%

5:00

JPY

Annualized Housing Starts

0.975M

0.994M

0.976M

5:00

JPY

Housing Starts (YoY)

12.0%

14.3%

15.3%

5:00

JPY

Construction Orders (YoY)

13.7%

-

21.9%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

6:00

GBP

Nationwide House Prices s.a. (MoM) (AUG)

0.6% (A)

0.9%

Medium

6:00

GBP

Nationwide House Prices n.s.a. (YoY) (AUG)

3.5% (A)

3.9%

Medium

6:00

EUR

German Retail Sales (YoY) (JUL)

2.3% (A)

-2.4%

Medium

6:00

EUR

German Retail Sales (MoM) (JUL)

-1.4% (A)

-0.8%

Medium

7:00

CHF

KOF Swiss Leading Indicator (AUG)

1.36 (A)

1.25

Medium

8:30

GBP

Net Consumer Credit (JUL)

0.6B

0.5B

Low

8:30

GBP

Net Lending Sec. on Dwellings (JUL)

1.1B

1.0B

Low

8:30

GBP

Mortgage Approvals (JUL)

58.8K

57.7K

Medium

8:30

GBP

M4 Money Supply (YoY) (JUL)

-

1.5%

Low

8:30

GBP

M4 Money Supply (MoM) (JUL)

-

0.1%

Low

8:30

GBP

M4 Ex IOFCs 3M Annualised (JUL)

4.5%

4.7%

Low

9:00

EUR

Euro-Zone Business Climate Indicator (AUG)

-0.36

-0.53

Low

9:00

EUR

Euro-Zone Services Confidence (AUG)

-6.8

-7.8

Low

9:00

EUR

Euro-Zone Industrial Confidence (AUG)

-9.6

-10.6

Low

9:00

EUR

Euro-Zone Consumer Confidence (AUG F)

-

-15.6

Medium

9:00

EUR

Euro-Zone Economic Confidence (AUG)

93.8

92.5

Low

9:00

EUR

Euro-Zone Unemployment Rate (JUL)

12.1%

12.1%

Medium

9:00

EUR

Euro-Zone CPI Estimate (YoY) (AUG)

1.4%

1.6%

High

9:00

EUR

Euro-Zone CPI - Core (YoY) (AUG A)

1.1%

1.1%

Medium

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3022

1.3145

1.3193

1.3268

1.3316

1.3391

1.3514

GBPUSD

1.5382

1.5447

1.5475

1.5512

1.5540

1.5577

1.5642

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

To contact Ilya, email ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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30 August 2013 07:10 GMT