Euro, Stocks-Linked Currencies Vulnerable to Soft Eurozone GDP Print

2012-08-14 05:45:00 Ilya Spivak, Head Strategist, APAC

Talking Points

All Eyes on Eurozone 2Q GDP Report to Shape Risk Appetite Trends
Markets to Read Economic News Directly, Not in Terms of Stimulus
US Retail Sales Expected to Yield Strongest Outcome in Four Months

A busy calendar of economic data promises to finally nudge financial markets out of complacency. Second-quarterEurozone GDP figures headline the docket. While softer readings compared with the first quarter will not be surprising – indeed, a recession in the region is readily accepted as consensus view across financial markets at this point – the degree of downturn will be important to monitor and may prove market-moving. As we discussed in our weekly fundamental briefing, outcomes that fall short of expectations are likely to be read as negative for risk appetite, weighing on the Euro as well as stocks-linked currencies.

Separately, the German ZEW gauge of investor confidence is expected to drop to the lowest since July 2010 at 17.5 in August. The forward-looking Economic Sentiment sub-index is expected to print at -19.3, within a hair of the six-month low of -19.6 recorded in July. Meanwhile, UK CPI is set to put the annual inflation rate at the lowest since November 2009 at 2.3 percent. On balance, both outcomes are unlikely to prove particularly market-moving, the former overshadowed by GDP data and the latter made largely moot by firmly anchored Bank of England monetary policy expectations.

Later in the session, the spotlight shifts to July’s US Retail Sales report. The reading will help establish the degree of follow-through on the stronger-than-expected jobs growth figures published earlier this month. Economists’ forecasts suggest receipts will add 0.3 percent, marking the strongest reading in four months. On the sentiment front, S&P 500 stock index futures are pointing cautiously higher to warn that safe-haven US Dollar and Japanese Yen may find themselves under pressure against their top counterparts. The critical mass of top-tier event risk on the docket may rapidly change the landscape in the hours ahead however.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Retail Sales Ex Inflation (QoQ) (2Q)	1.3%	0.7%	-0.6%
23:01	GBP	RICS House Price Balance (JUL)	-24%	-23%	-22%
23:50	JPY	Bank of Japan July Meeting Minutes	-	-	-
23:50	JPY	Tertiary Industry Index (MoM) (JUN)	0.1%	-0.3%	0.7%
1:30	AUD	New Motor Vehicle Sales (MoM) (JUL)	-0.8%	-	-1.0% (R-)
1:30	AUD	New Motor Vehicle Sales (YoY) (JUL)	5.0%	-	18.1% (R-)
1:30	AUD	NAB Business Conditions (JUL)	-3	-	-1
1:30	AUD	NAB Business Confidence (JUL)	4	-	-3
3:00	NZD	Non Resident Bond Holdings (JUL)	62.8%	-	62.0%

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
5:30	EUR	French CPI - EU Harmonised (MoM) (JUL)	-0.5%	0.1%	Low
5:30	EUR	French CPI - EU Harmonised (YoY) (JUL)	2.3%	2.3%	Low
5:30	EUR	French Consumer Price Index (MoM) (JUL)	-0.4%	0.0%	Low
5:30	EUR	French Consumer Price Index (YoY) (JUL)	2.0%	1.9%	Low
5:30	EUR	French CPI Ex Tobacco Index (JUL)	124.2	124.78	Low
5:30	EUR	French GDP (QoQ) (2Q P)	-0.1%	0.0%	Medium
5:30	EUR	French GDP (YoY) (2Q P)	0.2%	0.3%	Medium
6:00	EUR	German GDP n.s.a. (YoY) (2Q P)	0.9%	1.7%	High
6:00	EUR	German GDP s.a. (QoQ) (2Q P)	0.2%	0.5%	High
6:00	EUR	German GDP w.d.a. (YoY) (2Q P)	1.1%	1.2%	High
6:45	EUR	French Wages (QoQ) (2Q P)	-	0.9%	Low
6:45	EUR	French Non-Farm Payrolls (QoQ) (2Q P)	-0.1%	0.1%	Low
7:15	CHF	Producer & Import Prices (MoM) (JUL)	-0.2%	-0.3%	Low
7:15	CHF	Producer & Import Prices (YoY) (JUL)	-1.7%	-2.2%	Low
8:30	GBP	DCLG UK House Prices (YoY) (JUN)	1.5%	2.3%	Low
8:30	GBP	Consumer Price Index (MoM) (JUL)	-0.1%	-0.4%	Medium
8:30	GBP	Consumer Price Index (YoY) (JUL)	2.3%	2.4%	High
8:30	GBP	Core Consumer Price Index (YoY) (JUL)	2.1%	2.1%	Medium
8:30	GBP	Retail Price Index (JUL)	241.4	241.8	Low
8:30	GBP	Retail Price Index (MoM) (JUL)	-0.2%	-0.2%	Low
8:30	GBP	Retail Price Index (YoY) (JUL)	2.8%	2.8%	Low
8:30	GBP	RPI ex Mort Int. Payments (YoY) (JUL)	2.9%	2.8%	Low
9:00	EUR	Euro-Zone GDP s.a. (QoQ) (2Q A)	-0.2%	0.0%	High
9:00	EUR	Euro-Zone GDP s.a. (YoY) (2Q A)	-0.4%	-0.1%	High
9:00	EUR	Euro-Zone Industrial Production w.d.a. (YoY) (JUN)	-2.1%	-2.6%	Medium
9:00	EUR	Euro-Zone Industrial Production s.a. (MoM) (JUN)	-0.7%	0.9%	Medium
9:00	EUR	German ZEW Survey (Curr. Situation) (AUG)	17.5	21.1	High
9:00	EUR	German ZEW Survey (Econ. Sentiment) (AUG)	-19.3	-19.6	High
9:00	EUR	Euro-Zone ZEW Survey (Econ. Sentiment) (AUG)	-	-22.3	Medium