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Forex: Euro at Risk on Soft German CPI, Dollar May Rise on UofM Print

By , Currency Strategist
28 March 2014 05:57 GMT

Talking Points:

  • Euro May Extend Drop as Soft German CPI Fuels ECB Stimulus Bets
  • British Pound Likely to Overlook Final Revision of 4Q UK GDP Data
  • US Dollar May Bounce if UofM Revision Tops Economists’ Forecasts

March’s preliminary German CPI report headlines the economic calendar in European hours. Expectations call for the headline year-on-year inflation rate to decline to 1.1 percent, the lowest since August 2010. Weak price growth readings in the Eurozone’s largest economy may fuel concerns about continued disinflation region-wide and drive speculation about a near-term expansion of ECB stimulus efforts, weighing on the Euro. The single currency dropped to a three-week low yesterday.

The final revision of fourth-quarter UK GDP data is expected to match earlier estimates showing output grew 0.7 percent, confirming a marginal slowdown from the 0.8 percent increase recorded in the three months through September. Absent a material deviation from consensus forecasts, the release seems unlikely to yield a significant response from the British Pound considering its limited implications for the near-term direction of BOE monetary policy.

Later in the day, the spotlight shifts to February’s US Personal Consumption and Spending figures as well as the final revision of the March Consumer Confidence measure from the University of Michigan. While the former two data points are expected to print in line with 12-month trend averages and so may not inspire a hearty response from the markets, the latter is expected to be revised higher.

A larger upgrade in line with the better-than-expected outcome on an analogous indicator from the Conference Board earlier in the week may further erode doubts about Fed QE “taper” continuity. That stands to boost the yield attraction of the US Dollar, driving the benchmark currency upward from support at the March swing low.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

JPY

Household Spending (YoY) (FEB)

-2.5%

0.1%

1.1%

23:30

JPY

National CPI (YoY) (FEB)

1.5%

1.5%

1.4%

23:30

JPY

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

1.3%

1.3%

1.3%

23:30

JPY

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

0.8%

0.8%

0.7%

23:30

JPY

Tokyo CPI (YoY) (MAR)

1.3%

1.2%

1.1%

23:30

JPY

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

1.0%

0.9%

0.9%

23:30

JPY

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

0.4%

0.5%

0.5%

23:30

JPY

Jobless Rate (FEB)

3.6%

3.7%

3.7%

23:30

JPY

Job-To-Applicant Ratio (FEB)

1.05

1.05

1.04

23:50

JPY

Retail Trade (YoY) (FEB)

3.6%

3.5%

4.4%

23:50

JPY

Retail Trade s.a. (MoM) (FEB)

0.3%

0.1%

1.6%

23:50

JPY

Large Retailers' Sales (FEB)

1.3%

0.8%

0.0%

0:05

GBP

GFK Consumer Confidence (MAR)

-5

-6

-7

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

German Import Price Index (YoY) (FEB)

-2.4%

-2.3%

Low

7:00

EUR

German Import Price Index (MoM) (FEB)

0.2%

-0.1%

Low

8:00

CHF

KOF Institute Spring Economic Forecast

-

-

Low

9:30

GBP

GDP (QoQ) (4Q F)

0.7%

0.7%

Medium

9:30

GBP

GDP (YoY) (4Q F)

2.7%

2.7%

Medium

9:30

GBP

Total Business Investment (QoQ) (4Q F)

2.4%

2.4%

Low

9:30

GBP

Total Business Investment (YoY) (4Q F)

8.5%

8.5%

Low

9:30

GBP

Current Account (£) (4Q)

-13.8B

-20.7B

Low

9:30

GBP

Index of Services (MoM) (JAN)

0.3%

0.2%

Low

9:30

GBP

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

0.9%

0.8%

Low

9:30

GBP

Lloyds Business Barometer (MAR)

-

53

Low

10:00

EUR

Euro-Zone Services Confidence (MAR)

3.7

3.2

Low

10:00

EUR

Euro-Zone Economic Confidence (MAR)

101.3

101.2

Low

10:00

EUR

Euro-Zone Industrial Confidence (MAR)

-3.5

-3.4

Low

10:00

EUR

Euro-Zone Consumer Confidence (MAR F)

-

-9.3

Medium

10:00

EUR

Euro-Zone Business Climate Indicator (MAR)

0.38

0.37

Low

13:00

EUR

German CPI (MoM) (MAR P)

0.4%

0.5%

High

13:00

EUR

German CPI (YoY) (MAR P)

1.1%

1.2%

High

13:00

EUR

German CPI - EU Harmonized (MoM) (MAR P)

0.4%

0.5%

Medium

13:00

EUR

German CPI - EU Harmonized (YoY) (MAR P)

0.9%

1.2%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3619

1.3687

1.3714

1.3755

1.3782

1.3823

1.3891

GBP/USD

1.6420

1.6512

1.6562

1.6604

1.6654

1.6696

1.6788

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

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28 March 2014 05:57 GMT