FX Headlines: European Data Watch for July 5, 2013
EUROPEAN FX HEADLINES: WEEK OF JUNE 30
EURO-ZONE ECONOMIC CALENDAR
Only one item on the Euro-Zone calendar warrants attentin on Friday, and that is the May German Factory Orders report. Accordingly, in line with the recent outperformance (relative to consensus forecasts compiled by Bloomberg News) of German data, specifically the June labor market report and the May Retail Sales report, a stronger figure here wouldn’t be surprising.
Likewise, Factory Orders have proven to be stronger of recent. One caveat: the final May PMI Manufacturing was 49.4, signaling a modest contraction in the sector. A beat here would imply increased trade activity with German’s Euro-Zone neighbors, which might boost optimism in a thin market following the massive Euro selloff on Thursday.
UK ECONOMIC CALENDAR
There is no data on the UK econmic docket for Friday, July 5. Accordingly, the British Pound will be influenced by two significant factors: first, the continued pricing in of the Bank of England’s new “forward guidance” policy, which sunk the Sterling across the board on Thursday; and second, whether or not the June US labor market report will vindicate recent US Dollar strength, which could be accentuated on a headline >+185K.
SWISS ECONOMIC CALENDAR
Whereas most Swiss data has been rather benign since the SNB implemented the Sf1.2000 floor for EURCHF, the June Consumer Price Index report has the potential to produce additional volatility, excess of that already present due to major developing global themes in recent weeks. (Including but not limited to: the Fed taper; the Chinese credit crunch; the emerging market plunge; and the legitimacy of ‘Abenomics.’)
The main takeaway is that a weaker pace of deflation (towards a positive CPI headline) is a disincentive for the SNB to increase its interventionist activities. Nevertheless, with other European central banks digging into “forward guidance” to keep rates tethered lower for the foreseeable future, persistent deflation might just be the excuse the SNB needs to raise the EURCHF floor to 1.2500 or even 1.3000.
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--- Written by Christopher Vecchio, Currency Analyst
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