German Court Decision and Troika-Greece Meeting Set to Weigh on Markets

2012-09-10 06:05:00 Benjamin Spier, Technical Strategist

Talking Points

Major events for this week include German High Court ESM ruling and Troika meeting in Greece
Chinese export growth slows and imports decline
Japan GDP estimate for 2Q halved

Following last week’s official announcement of ECB bond purchases, this week is also likely to provide major headlines that could affect the future of the Euro and a possible recovery from the debt crisis. In Germany, the High Court is set to present its decision on Wednesday about the legality of the permanent ESM rescue fund. German Lawmaker Gauweiler said today that he will try to delay the court’s decision because the ECB announcement fundamentally changes the situation. Gauweiler added that the central bank has become a hyper rescue fund. German Finance Minister Wolfgang Schaeuble said over the weekend that he expects the court to approve the ESM.

Additionally, Troika representatives are set to meet with Greek PM Samaras today. Samara’s coalition members recently refused 11.5 billion Euros of spending cuts, over worries that it would hurt Greece’s poor. The Troika are set to receive Greece’s austerity measures on Friday, which it must approve in order for Greece to receive the next 31 billion Euro bailout payment.

Both the Troika acceptance of the Greek austerity measures and the German court approval of the ESM would be seen as steps to improve the Euro and prevent the breakup of the single currency, and would therefore be Euro positive.

In the overnight Asian session, Chinese exports rose less than 3% and imports declined, as the global crisis slowed demand in China and abroad. Reports also showed a decline in industrial production and lower producer prices. The slowdown in the economic releases places pressure on Chinese Premiere Wen Jiabao to add to the stimulus program.

In Japan, the GDP growth in the second quarter was cut in half today by a revised estimate. According to the estimate, the economy grew by 0.7%. However, USDJPY did not significantly react to the lower than expected revision, the pair continues to trade slightly above 78.20.

Later this session, we will see the final estimate of the Italian GDP for 2Q and the results of the Euro-zone Sentix Investor Confidence Survey for September.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
1:30	CNY	Consumer Price Index (YoY) (AUG)	2.0%	2.0%	1.8%
1:30	CNY	Produce Price Index (YoY) (AUG)	-3.5%	-3.2%	-2.9%
5:30	CNY	Industrial Production (YoY) (AUG)	8.9%	9.0%	9.2%
5:30	CNY	Industrial Production YTD (YoY) (AUG)	10.1%	10.2%	10.3%
5:30	CNY	Retail Sales (YoY) (AUG)	13.2%	13.2%	13.1%
5:30	CNY	Retail Sales YTD (YoY) (AUG)	14.1%	14.1%	14.2%
5:30	CNY	Fixed Assets Inv Excl. Rural YTD (YoY) (AUG)	20.2%	20.4%	20.4%
22:45	NZD	Manufacturing Activity Volume s.a. (QoQ) (2Q)	0.3%	-	1.2% (R+)
22:45	NZD	Manufacturing Activity (2Q)	-1.1%	-	-1.5% (R+)
23:01	GBP	Lloyds Employment Confidence (AUG)	-43	-	-51
23:50	JPY	Gross Domestic Product (QoQ) (2Q F)	0.2%	0.3%	0.3%
23:50	JPY	Gross Domestic Product Annualized (2Q F)	0.7%	1.0%	1.4%
23:50	JPY	Gross Domestic Product Deflator (YoY) (2Q F)	-0.9%	-1.1%	-1.1%
23:50	JPY	Nominal Gross Domestic Product (QoQ) (2Q F)	-0.3%	-0.2%	-0.1%
23:50	JPY	Current Account Total (¥) (JUL)	625.4B	485.6B	433.3B
23:50	JPY	Adjusted Current Account Total (¥) (JUL)	335.4B	389.0B	773.6B
23:50	JPY	Current Account Balance (YoY) (JUL)	-40.6%	-52.0%	-19.6%
23:50	JPY	Trade Balance - BOP Basis (¥) (JUL)	-373.6B	-439.5B	112.0B
23:50	JPY	Bank Lending incl Trusts (YoY) (AUG)	0.9%		0.7%
23:50	JPY	Bank Lending ex-Trust (AUG)	1.1%	1.1%	0.9% (R-)
1:30	AUD	Investment Lending (JUL)	-2.7%		4.4% (R-)
1:30	AUD	Home Loans (JUL)	-1.0%	0.0%	1.0% (R-)
1:30	AUD	Value of Loans (MoM) (JUL)	-1.4%	-	0.9% (R-)
1:35	NZD	REINZ Housing Price Index (MoM) (AUG)	1.3%	-	-0.7%
1:35	NZD	REINZ House Sales (YoY) (AUG)	16.2%	--	19.9%
1:35	NZD	REINZ Housing Price Index (AUG) (AUG)	3420.1		3377.1
3:02	CNY	Trade Balance (USD) (AUG)	$26.66B	$19.50B	$25.15B
3:02	CNY	Exports (YoY) (AUG)	2.7%	2.9%	1.0%
3:02	CNY	Imports (YoY) (AUG)	-2.6%	3.5%	4.7%
4:30	JPY	Bankruptcies (YoY) (AUG)	-5.8%	-	-5.1%
5:00	JPY	Consumer Confidence (AUG)	40.5	39.4	39.7
6:00	JPY	Eco Watchers Survey: Current (AUG)	43.6	43.4	44.2
6:00	JPY	Eco Watchers Survey: Outlook (AUG)	43.6	44.4	44.9

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:30	EUR	French Bank of France Bus. Sentiment (AUG)	89	90	Low
6:45	EUR	French Industrial Production (MoM) (JUL)	-0.5%	0.0%	Low
6:45	EUR	French Industrial Production (YoY) (JUL)	-3.7%	-2.3%	Low
6:45	EUR	French Manufacturing Production (MoM) (JUL)	-0.5%	0.1%	Low
6:45	EUR	French Manufacturing Production (YoY) (JUL)	-4.2%	-2.6%	Low
8:00	EUR	Italian GDP sa and wda (QoQ) (2Q F)	-0.7%	-0.7%	Medium
8:00	EUR	Italian GDP sa and wda (YoY) (2Q F)	-2.5%	-2.5%	Medium
8:30	EUR	Euro-Zone Sentix Investor Confidence (SEP)	-30.5	-30.3	Medium