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Forex: Euro to Look Past German Data, Dollar Eyeing Home Sales Report

By , Currency Strategist
23 May 2014 04:38 GMT

Talking Points:

  • Australian Dollar Follows Stocks Higher in Quiet Overnight Trade
  • German GDP Revision, IFO Data Unlikely to Fuel Euro Volatility
  • US Dollar Looking for Catalyst in April’s New Home Sales Report

The Australian Dollar narrowly outperformed in otherwise quiet overnight trade, rising as much as 0.3 percent on average against its leading counterparts. The move appeared to reflect a risk-on mood on Asian bourses. The MSCI Asia Pacific regional equity benchmark index rose 0.5 percent, boosting the sentiment-sensitive Australian unit. The likewise risk-geared New Zealand Dollar was unable to capitalize, hobbled by a disappointing ANZ Consumer Confidence report. The gauge fell 4.4 percent in May, marking the largest decline in fourteen months. We remain short AUDUSD.

The economic calendar is relatively muted in European trading hours. The final revision of first-quarter German GDP figures is expected to confirm output grew 0.8 percent, marking a pickup from the 0.4 percent recorded in the final three months of 2013. Separately, the German IFO gauge of business confidence is expected to show the headline Business Climate index edged narrowly lower to 110.9 in May. A print in line with expectations would fall broadly in line with near- to medium-term trend averages. On balance, these figures offer little in terms of directional guidance for the Euro in as much they would do little to further inform speculation about the likelihood of imminent ECB stimulus expansion. We have entered short EURUSD.

Later in the day, the spotlight turns to US New Home Sales figures. Expectations call for a print at 425K in April, marking a return to form after a deep slump to an eight-month low at 384K in March. Furthermore, US economic news-flow has increasingly improved relative to expectations in early April, suggesting analysts are underestimating the resilience of recovery in the world’s largest economy and opening the door for an upside surprise.Needless to say, such a result is likely to bode well for the US Dollar as prices attempt to extend upward after hitting a two-month high.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

1:00

NZD

ANZ Consumer Confidence Index (MAY)

127.6

-

133.5

1:00

NZD

ANZ Consumer Confidence (MoM) (MAY)

-4.4%

-

1.1%

2:00

CNY

Conference Board Leading Index (APR)

288.1

-

285.5

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

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

0.8%

0.4%

Medium

6:00

EUR

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

2.3%

1.4%

Medium

6:00

EUR

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

2.5%

1.3%

Medium

6:00

EUR

German Capital Investment (1Q)

2.1%

1.4%

Low

6:00

EUR

German Domestic Demand (1Q)

1.4%

-0.7%

Low

6:00

EUR

German Private Consumption (1Q)

0.6%

-0.1%

Low

6:00

EUR

German Government Spending (1Q)

0.3%

0.0%

Low

6:00

EUR

German Construction Investment (1Q)

3.2%

1.4%

Low

6:00

EUR

German Exports (1Q)

0.6%

2.6%

Low

6:00

EUR

German Imports (1Q)

1.0%

0.6%

Low

8:00

EUR

German IFO - Current Assessment (MAY)

115.5

115.3

Medium

8:00

EUR

German IFO - Expectations (MAY)

106.6

107.3

Medium

8:00

EUR

German IFO - Business Climate (MAY)

110.9

111.2

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3577

1.3620

1.3638

1.3663

1.3681

1.3706

1.3749

GBP/USD

1.6748

1.6814

1.6842

1.6880

1.6908

1.6946

1.7012

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

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23 May 2014 04:38 GMT