Euro, Risky Assets Look to Eurozone PMI and German IFO for Direction

2012-05-24 07:05:00 Ilya Spivak, Head Strategist, APAC

Talking Points

Euro, Risky Assets Look to Eurozone PMI and German IFO for Direction
German, UK GDP Reports Unlikely to Stir Volatility Absent Large Revisions
S&P 500 Stock Index Futures Point Lower, Hinting at Lingering Jitters

The major currencies consolidated in quiet overnight trade as markets digested volatility over the preceding 24 hours before a busy day of European economic data offers new catalysts. The preliminary set of May’s Eurozone PMI figures is in focus. Region-wide metrics are expected to show the manufacturing and services sectors shrank for the fourth consecutive month, with the pace of contractions slightly accelerating from April. Separately, the German IFO business confidence survey is forecast to show sentiment soured in May after printing flat in the prior month.

Markets will look to the outcomes to gauge the degree of regional slowdown, establishing the extent to which it can sabotage deficit-reduction efforts and amplify credit-market stress. After yesterday’s lackluster EU leaders’ summit – which delivered little besides showing surface-level support for keeping Greece within the Eurozone and exposing familiar disagreement on jointly-issued “Eurobonds” – the outcomes may prove decisive in setting the trajectory of the Euro as well as risk-linked currencies until the second Greek election in mid-June.

Elsewhere on the docket, updated first-quarter German GDP numbers are also on tap, with the by-component breakdown due to be unveiled. The report seems likely to pass with little fanfare absent particularly sharp deviations from previously seen results. Revised UK GDP figures for the same period will probably follow a similar dynamic. On the sentiment front, S&P 500 stock index futures are pointing narrowly lower, hinting at lingering jitters across financial markets

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Trade Balance (NZ$)	355M	400M	186M (R+)
22:45	NZD	Exports (NZ$)	3.89B	4.10B	4.21B (R-)
22:45	NZD	Imports (NZ$)	3.53B	3.70B	4.02B (R-)
22:45	NZD	Trade Balance YTD (NZ$)	-541M	-651M	262M (R+)
1:00	AUD	CBAHIA House Affordability	61.8	-	58.5
2:30	CNY	HSBC Flash China Manufacturing PMI	48.7	-	49.3
5:00	JPY	BOJ Monthly Economic Report	-	-	-

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:00	EUR	German GDP n.s.a. (YoY) (1Q F)	1.7%	1.7%	Medium
6:00	EUR	German GDP w.d.a. (YoY) (1Q F)	1.2%	1.2%	Medium
6:00	EUR	German GDP s.a. (QoQ) (1Q F)	0.5%	0.5%	Medium
6:00	EUR	German Exports (1Q)	0.9%	-0.8%	Low
6:00	EUR	German Imports (1Q)	0.3%	-0.3%	Low
6:00	EUR	German Domestic Demand (1Q)	0.0%	0.1%	Low
6:00	EUR	German Capital Investment (1Q)	-0.3%	1.1%	Low
6:00	EUR	German Government Spending (1Q)	0.3%	0.1%	Low
6:00	EUR	German Construction Investment (1Q)	-0.4%	1.9%	Low
6:00	EUR	German Private Consumption (1Q)	0.2%	-0.2%	Low
6:00	CHF	Trade Balance (CHF) (APR)	1.90B	1.58B	Medium
6:00	CHF	Imports (MoM) (APR)	-	4.6%	Low
6:00	CHF	Exports (MoM) (APR)	0.2%	-2.5%	Low
6:45	EUR	France Production Outlook Indicator (MAY)	-	-14	Low
6:45	EUR	France Own-Company Production Outlook (MAY)	-	-4	Low
6:45	EUR	France Business Confidence Indicator (MAY)	94	95	Low
7:00	EUR	French PMI Manufacturing (MAY P)	47.0	46.9	Medium
7:00	EUR	French PMI Services (MAY P)	45.7	45.2	Medium
7:30	EUR	German PMI Manufacturing (MAY P)	47.0	46.2	High
7:30	EUR	German PMI Services (MAY P)	52.0	52.2	High
8:00	EUR	Euro-Zone PMI Composite (MAY P)	46.6	46.7	High
8:00	EUR	Euro-Zone PMI Manufacturing (MAY P)	46.0	45.9	High
8:00	EUR	Euro-Zone PMI Services (MAY P)	46.7	46.9	High
8:00	EUR	German IFO – Business Climate (MAY)	109.4	109.9	Medium
8:00	EUR	German IFO – Expectations (MAY)	102.0	102.7	Medium
8:00	EUR	German IFO – Current Assessment (MAY)	117.1	117.5	Medium
8:30	GBP	BBA Loans for House Purchase (APR)	32000	31888	Low
8:30	GBP	Gross Domestic Product (QoQ) (1Q P)	-0.2%	-0.2%	Medium
8:30	GBP	Gross Domestic Product (YoY) (1Q P)	0.0%	0.0%	Medium
8:30	GBP	Private Consumption (1Q P)	0.3%	0.4%	Low
8:30	GBP	Gross Fixed Capital Formation (1Q P)	-0.5%	-0.6%	Low
8:30	GBP	Government Spending (1Q P)	0.0%	0.5%	Low
8:30	GBP	Exports (1Q P)	-0.3%	1.6%	Low
8:30	GBP	Imports (1Q P)	0.1%	0.9%	Low
8:30	GBP	Total Business Investment (QoQ) (1Q E)	-1.0%	-3.3%	Low
8:30	GBP	Total Business Investment (YoY) (1Q E)	9.2%	1.6%	Low
8:30	GBP	Index of Services (MoM) (MAR)	0.3%	-0.4%	Low
8:30	GBP	Index of Services (3M/3M) (MAR)	0.2%	0.2%	Low