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Euro, Aussie Dollar May Rise as Yen Falls on Greece Funding Deal

Euro, Aussie Dollar May Rise as Yen Falls on Greece Funding Deal

Talking Points:

  • Euro to Look Past CPI Data, Focus on Greece Debt Negotiations
  • Greek Deal May Boost Aussie and NZ Dollar, Boost Japanese Yen
  • Access Real-Time FX Markets Analysis with DailyFX on Demand

The preliminary set of March Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, rising for a second consecutive month. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook.

Rather, the spotlight is likely to remain on Greece. Athens submitted a list of proposed reforms on Friday. The markets now await the verdict on whether the “institutions” representing Greece’s creditors – the EU, the ECB and the IMF – will approve it and unlock the next round of bailout funding. Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the Eurozone.

On balance, both sides of the negotiation are interested in a deal. Prime Minister Alexis Tsipras and company surely realize that a disorderly redenomination will probably compound the country’s economic woes and cost them their jobs. Meanwhile, EU and IMF officials no doubt prefer to avoid a “Grexit” scenario for fear of the precedent it may set. On balance, this means that some kind of accommodation is more likely than not.

An accord that prevents a default and keeps Greece in the currency bloc is likely to prove supportive for the single currency. Follow-through may be somewhat limited however as on-going ECB QE casts a dark cloud over the near-term outlook. It may likewise boost overall risk appetite, sending the sentiment-geared Australian and New Zealand Dollars upward while punishing the safe-haven Japanese Yen. Needless to say, failing to reach a deal stands to produce the opposite response.

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Asia Session

GMTCCYEVENTACTEXPPREV
21:45NZDBuilding Permits (MoM) (FEB)-6.3%--4.6%
22:30AUDANZ Roy Morgan Weekly Consumer Conf112.3-111.4
23:05GBPGfK Consumer Confidence (MAR)421
23:50JPYLoans & Discounts Corp (YoY) (FEB)3.22%-2.91%
0:00AUDHIA New Home Sales (MoM) (FEB)1.1%-1.8%
0:00NZDANZ Activity Outlook (MAR)42.2-40.9
0:00NZDANZ Business Confidence (MAR)35.8-34.4
0:30AUDPrivate Sector Credit (MoM) (FEB)0.5%0.5%0.6%
0:30AUDPrivate Sector Credit (YoY) (FEB)6.2%6.3%6.1%
2:00NZDMoney Supply M3 (YoY) (FEB)6.6%-6.2%
4:00JPYVehicle Production (YoY) (FEB)-5.3% --9.7%
5:00JPYHousing Starts (YoY) (FEB)-6.8%-13.0%
5:00JPYAnnualized Housing Starts (FEB)0.877M0.864M
5:00JPYConstruction Orders (YoY) (FEB)-27.5%

European Session

GMTCCYEVENTEXPPREVIMPACT
6:00EURGerman Retail Sales (MoM) (FEB)-0.7%2.3%Medium
6:00EURGerman Retail Sales (YoY) (FEB)3.4%5.3%Medium
7:55EURGerman Unemployment Change (MAR)-12K-20KMedium
7:55EURGerman Unemployment Rate (MAR)6.5%6.5%Medium
8:30GBPCurrent Account Balance (4Q)-22.0B-27.0BLow
8:30GBPGDP (QoQ) (4Q F)0.5%0.50%Medium
8:30GBPGDP (YoY) (4Q F)2.7%2.7%Medium
8:30GBPTotal Business Investment (QoQ) (4Q F)--1.4%Low
8:30GBPTotal Business Investment (YoY) (4Q F)-2.1%Low
8:30GBPIndex of Services (MoM) (JAN)0.3%0.6%Low
8:30GBPIndex of Services (3M/3M) (JAN)0.8%0.8%Low
8:30GBPLloyds Business Barometer (MAR)-45Low
9:00EUREurozone Unemployment Rate (FEB)11.2%11.2%Medium
9:00EUREurozone CPI Estimate (YoY) (MAR)-0.1%-0.3%High
9:00EUREurozone CPI Core (YoY) (MAR A)0.7%0.7%High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.06591.07541.07941.08491.08891.09441.1039
GBPUSD1.45251.46731.47421.48211.48901.49691.5117

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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