Talking Points:
- Euro to Look Past IFO Data to Focus on Greece-Themed Eurogroup Meeting
- US Dollar May Rise if 1Q GDP Upgrade Reboots Fed Rate Hike Speculation
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June’s German IFO survey of business confidence headlines the datadocket in European trading hours. The forward-looking Expectations index is expected to decline for the third consecutive month to hit 102.4, the lowest since January. The Euro seems unlikely to pay much heed to the however considering its limited implications for near-term ECB monetary policy. The central bank looks to be effectively on auto-pilot as it continues to implement its €60 billion/month QE effort.
Rather, the single currency will probably take its cues from the outcome of another emergency meeting of Eurozone finance ministers in Brussels. Policymakers will be focused on Greece and the updated set of proposed reforms that Athens submitted to its creditors earlier in the week. The government means to trade the promise of delivering on these proposals for the pay-out of the last tranche of funding through Greece’s second bailout package before it expires at month-end.
Markets fear that if negotiations falter, a subsequent Greek default will take the country out of the Eurozone and trigger as-yet unknown consequences. With that in mind, traders are anxiously awaiting confirmed signs of a breakthrough or a final collapse of negotiations without further room to maneuver.
The former scenario is likely to boost the Euro as ebbing uncertainty risk bolsters the spectrum of assets denominated in the single currency. It may likewise boost overall risk appetite, offering a lift to higher-yielding FX while weighing on the safety-linked Japanese Yen. Follow-though may be limited however considering the markets’ priced-in outlook seems to favor an agreement. Needless to say, another disappointment stands to produce the opposite results.
Later in the day, the final revision of first-quarter US GDP figures enters the spotlight. Expectations call for a slight upgrade to reflect a 0.2 percent contraction versus the 0.7 percent downturn estimated previously. US economic news-flow has broadly improved relative to consensus forecasts since mid-May, opening the door for an upside surprise. Such a result may further boost the US Dollar as markets shift forward their bets on the likely timeline of Fed tightening.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 23:50 | JPY | Bank of Japan May 21-22 Meeting Minutes | - | - | - |
| 23:50 | JPY | PPI Services (YoY) (MAY) | 0.6% | 0.5% | 0.7% |
| 01:00 | AUD | Skilled Vacancies (MoM) (MAY) | -1.0% | - | -0.8% |
| 01:45 | CNY | Westpac-MNI Consumer Sentiment (JUN) | 112.3 | - | 111.1 |
| 02:00 | CNY | Conference Board Leading Index (MAY) | 326.2 | - | 322.5 |
| 05:00 | JPY | Small Business Confidence (JUN) | 46.9 | 48.3 | 48.1 |
European Session
| GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
|---|---|---|---|---|---|
| 06:00 | CHF | UBS Consumption Indicator (MAY) | 1.73 (A) | 1.67 | Low |
| 06:45 | EUR | French GDP (YoY) (1Q F) | 0.8% (A) | 0.7% | Low |
| 06:45 | EUR | French GDP (QoQ) (1Q F) | 0.6% (A) | 0.6% | Low |
| 08:00 | EUR | German IFO Business Climate (JUN) | 108.1 | 108.5 | Medium |
| 08:00 | EUR | German IFO Current Assessment (JUN) | 114.1 | 114.3 | Medium |
| 08:00 | EUR | German IFO Expectations (JUN) | 102.4 | 103.0 | Medium |
| 08:30 | GBP | BBA Loans for House Purchase (MAY) | 43350 | 42116 | Low |
| 13:00 | EUR | Eurozone FinMins Hold Emergency Meeting | - | - | High |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EURUSD | 1.0792 | 1.1004 | 1.1086 | 1.1216 | 1.1298 | 1.1428 | 1.1640 |
| GBPUSD | 1.5511 | 1.5634 | 1.5682 | 1.5757 | 1.5805 | 1.5880 | 1.6003 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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