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Forex: Euro May Fall Further on Dovish Turn in ECB Commentary

By , Currency Strategist
12 March 2014 05:36 GMT

Talking Points:

  • US, European Economic Calendars Light on Fundamental Event Risk
  • Euro May Fall if ECB Officials Continue to Talk Up Stimulus Options
  • Australian Dollar Sold as Asian Stocks Drop on China Growth Fears

Another quiet day on the economic data front will put the spotlight on a busy ECB speaking calendar. No less than five of the central bank’s officials are due to cross the wires throughout the session. The Euro posted its largest daily drawdown in a week yesterday after comments from ECB Vice President Vitor Constancio and board member Sabine Lautenschlaeger.

The former said he and his colleagues were emphasizing slack in the economy at the March policy meeting and reminded markets that the ECB still has tools it can use to deliver stimulus, including rate cuts or quantitative easing. The latter echoed Constancio’s comments.

If this dovish rhetoric amounts to a concerted communication strategy from the Eurozone monetary authority, more of the same can be expected today, threatening to push the single currency lower as prices bump against support near the 1.38 figure against the US Dollar.

The Australian Dollar narrowly underperformed in overnight trade as a slide in Asian stock prices undermined demand for the sentiment-linked currency. The MSCI Asia Pacific regional benchmark index slide 1.4 percent in a move the newswires chalked up to swelling fears about a slowdown in China after this week’s disappointing economic data.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

AUD

Westpac Consumer Conf Index (MAR)

99.5

-

100.2

23:30

AUD

Westpac Consumer Confidence (MAR)

-0.7%

-

-3.0%

23:50

JPY

Tertiary Industry Index (MoM) (JAN)

0.9%

0.6%

-0.5%

23:50

JPY

Domestic CGPI (MoM) (FEB)

-0.2%

0.2%

0.2%

23:50

JPY

Domestic CGPI (YoY) (FEB)

1.8%

2.1%

2.5%

23:50

JPY

BSI Large All Industry (QoQ) (1Q)

12.7

-

8.3

23:50

JPY

BSI Large Manufacturing (QoQ) (1Q)

12.5

-

9.7

0:30

AUD

Home Loans (JAN)

0.0%

0.5%

-3.3%

0:30

AUD

Investment Lending (JAN)

-3.3%

-

2.5%

0:30

AUD

Value of Loans (MoM) (JAN)

1.5%

-

-2.1%

5:00

JPY

Consumer Confidence Index (FEB)

38.3

40.0

40.5

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

10:00

EUR

Euro-Zone Industrial Production (YoY) (JAN)

1.9%

0.5%

Medium

10:00

EUR

Euro-Zone Industrial Production (MoM) (JAN)

0.5%

-0.7%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3768

1.3813

1.3836

1.3858

1.3881

1.3903

1.3948

GBP/USD

1.6510

1.6566

1.6591

1.6622

1.6647

1.6678

1.6734

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

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12 March 2014 05:36 GMT