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Pound May Fall if Claims Data Disappoints, Euro at Risk of Deeper Losses

By , Currency Strategist
11 June 2014 04:16 GMT

Talking Points:

  • British Pound at Risk if Jobs Data Disappoints, Denting BOE Bets
  • Euro Vulnerable to Deeper Losses as ECB Rhetoric Stays Dovish
  • New Zealand Dollar Gains as Markets Position for RBNZ Rate Hike

May’s UK Jobless Claims data headlines the economic calendar in European hours. Applications for benefits are expected to have declined by 25,000 to mark the smallest drawdown in a year. UK news-flow has increasingly deteriorated relative to consensus forecasts over recent weeks, hinting analysts are overestimating the health of the economy and opening the door for downside surprises. A disappointing print may weigh against supportive BOE policy expectations, punishing the British Pound. We are positioning for a GBPUSD short trade setup.

Elsewhere, another packed calendar of scheduled commentary from ECB officials is ahead. Remarks from Governing Council members Ardo Hansson, Ewald Nowotny and Yves Mersch are all set to come across the wires. The ECB alluded to a forthcoming ABS purchase program as the next step in expanding its stimulus efforts and traders will be on the look-out for any details illuminating the operational details and timing of such a move. Rhetoric suggesting the QE-style effort is relatively close to implementation is likely to weigh on the Euro and we are looking for new EURUSD selling opportunities.

The New Zealand Dollar narrowly outperformed in otherwise quiet overnight trade. The move developed parallel to a rise in bond yields and a drop in New Zealand 3-month Bank Bill futures, hinting the advance reflected expectations of another interest rate hike at tomorrow’s RBNZ money policy meeting. Traders a pricing in a 95 percent probability of another 25bps increase in the benchmark lending rate, according to data from Credit Suisse. Live coverage of the RBNZ announcement begins at 20:45 GMT.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Credit Card Spending - Total (MoM) (MAY)

1.7%

-

-0.2%

22:45

NZD

Credit Card Spending - Retail (MoM) (MAY)

1.3%

0.5%

0.4%

23:30

AUD

ANZ Roy Morgan Consumer Conf Index (JUN 8)

102.2

-

102.2

23:50

JPY

BSI Large Manufacturing (QoQ) (2Q)

-13.9

-

12.5

23:50

JPY

BSI Large All Industry (QoQ) (2Q)

-14.6

-

12.7

23:50

JPY

Domestic CGPI (MoM) (MAY)

0.3%

0.1%

2.9%

23:50

JPY

Domestic CGPI (YoY) (MAY)

4.4%

4.1%

4.2%

0:30

AUD

Westpac Consumer Confidence (MoM) (JUN)

0.2%

-

-6.8%

0:30

AUD

Westpac Consumer Conf Index (JUN)

93.2

-

92.9

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

Jobless Claims Change (MAY)

-25.0K

-25.1K

High

8:30

GBP

Claimant Count Rate (MAY)

3.2%

3.3%

Medium

8:30

GBP

Average Weekly Earnings (3M/Y) (APR)

1.2%

1.7%

Low

8:30

GBP

Weekly Earnings ex Bonus (3M/Y) (APR)

1.2%

1.3%

Low

8:30

GBP

Employment Change (3M/3M) (APR)

270K

283K

Low

8:30

GBP

ILO Unemployment Rate (3M/3M) (APR)

6.7%

6.8%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3425

1.3493

1.3520

1.3561

1.3588

1.3629

1.3697

GBP/USD

1.6622

1.6697

1.6727

1.6772

1.6802

1.6847

1.6922

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

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11 June 2014 04:16 GMT