The Euro may pull back into the end of the trading week as governments’ deficit-fighting efforts and slower inflation spur expectations for additional ECB stimulus.
Talking Points
- Euro May Falter if Fiscal Consolidation, Disinflation Spur ECB Stimulus Bets
- US Dollar Sold Overnight as Spanish Budget Optimism Lingers in the FX Space
The economic calendar is relatively tame in European hours, with the spotlight likely to remain on Spain as the country releases bank stress test results. These will help price the assets to be transferred to so-called “bad banks” as part of the EU bailout of the country’s lenders. Traders will look to the release to gauge whether the €100 billion pledged by the regional bloc to rescue effort will prove sufficient.
France is also due to release the details of its 2013 budget. Economists expect the government will run a deficit equivalent to 4.6 percent of GDP this year, the highest among the core members of the Eurozone. With that in mind, President Francois Hollande and company may be forced to press on with tax hikes and/or spending cuts, both of which amount to a further headwind for already anemic growth.
A particularly punishing budget may begin to feed expectations for ECB stimulus to offset retrenchment on the fiscal side of the policy landscape, weighing on the Euro. A softer Eurozone CPI reading could reinforce such a dynamic. Expectations call for the headline inflation rate to slow to 2.4 percent in September from 2.6 percent in the prior month.
The US Dollar declined against its top counterparts in overnight trade as the risk-on mood seen in US hours carried into the Asian session. The chipper tone followed news the release of Spain’s 2013 budget, with the administration of Prime Minister Mariano Rajoy announcing an ambitious set of measures to bring the nation’s fiscal house in order. The New Zealand Dollar outperformed, adding as much as 0.4 percent on average against the majors.
Asia Session: What Happened
|
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
|
22:45 |
NZD |
Building Permits (MoM) (AUG) |
1.9% |
3.0% |
2.0% |
|
23:01 |
GfK Consumer Confidence Survey (SEP) |
-28 |
-28 |
-29 |
|
|
23:15 |
Nomura/JMMA Manufacturing PMI (SEP) |
48 |
- |
47.7 |
|
|
23:30 |
National CPI (YoY) (AUG) |
-0.4% |
-0.5% |
-0.4% |
|
|
23:30 |
National CPI Ex Food, Energy (YoY) (AUG) |
-0.5% |
-0.5% |
-0.6% |
|
|
23:30 |
National CPI Ex-Fresh Food (YoY) (AUG) |
-0.3% |
-0.3% |
-0.3% |
|
|
23:30 |
Tokyo CPI Ex Food, Energy (YoY) (SEP) |
-1.1% |
-0.9% |
-0.9% (R-) |
|
|
23:30 |
Tokyo CPI Ex-Fresh Food (YoY) (SEP) |
-0.4% |
-0.3% |
-0.5% |
|
|
23:30 |
Tokyo CPI (YoY) (SEP) |
-0.7% |
-0.6% |
-0.7% |
|
|
23:30 |
Jobless Rate (AUG) |
4.2% |
4.3% |
4.3% |
|
|
23:30 |
Job-To-Applicant Ratio(AUG) |
0.83 |
0.83 |
0.83 |
|
|
23:30 |
Household Spending (YoY) (AUG) |
1.8% |
1.1% |
1.7% |
|
|
23:50 |
Retail Trade s.a. (MoM) (AUG) |
1.5% |
-0.3% |
-1.5% |
|
|
23:50 |
Industrial Production (MoM) (AUG P) |
-1.3% |
-0.5% |
-1.0% |
|
|
23:50 |
Industrial Production (YoY) (AUG P) |
-4.3% |
-3.4% |
-0.8% |
|
|
23:50 |
Large Retailers' Sales(AUG) |
-0.9% |
-1.7% |
-4.4% |
|
|
23:50 |
Retail Trade (YoY) (AUG) |
1.8% |
-0.3% |
-0.7% (R+) |
|
|
1:30 |
Private Sector Credit (MoM) (AUG) |
0.2% |
0.3% |
0.2% |
|
|
1:30 |
Private Sector Credit (YoY) (AUG) |
4.1% |
4.3% |
4.2% |
|
|
1:35 |
CNY |
MNI September Business Sentiment Indicator |
51.35 |
- |
47.54 |
|
3:00 |
NZD |
Money Supply M3 (YoY) (AUG) |
7.2% |
- |
7.1% (R-) |
|
4:00 |
Vehicle Production (YoY) (AUG) |
4.5% |
- |
16.7% |
|
|
5:00 |
Annualized Housing Starts (AUG) |
0.888M |
0.872M |
0.870M |
|
|
5:00 |
Construction Orders (YoY) (AUG) |
8.7% |
- |
8.0% |
|
|
5:00 |
Housing Starts (YoY) (AUG) |
-5.5% |
-7.5% |
-9.6% |
Euro Session: What to Expect
|
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
|
5:30 |
EUR |
French Gross Domestic Product (QoQ) (2Q F) |
0.0% |
0.0% |
Medium |
|
5:30 |
EUR |
French Gross Domestic Product (YoY) (2Q F) |
0.3% |
0.3% |
Medium |
|
6:00 |
EUR |
German Retail Sales (MoM) (AUG) |
0.2% |
-1.0% |
Medium |
|
6:00 |
EUR |
German Retail Sales (YoY) (AUG) |
-0.9% |
-1.0% |
Medium |
|
6:45 |
EUR |
French Consumer Spending (YoY) (AUG) |
-0.7% |
0.2% |
Low |
|
6:45 |
EUR |
French Consumer Spending (MoM) (AUG) |
-0.3% |
0.1% |
Low |
|
6:45 |
EUR |
French Producer Prices (MoM) (AUG) |
0.6% |
-0.9% |
Low |
|
6:45 |
EUR |
French Producer Prices (YoY) (AUG) |
2.0% |
1.3% |
Low |
|
7:00 |
KOF Swiss Leading Indicator (SEP) |
1.50 |
1.57 |
Medium |
|
|
8:00 |
EUR |
Italian PPI (YoY) (AUG) |
2.5% |
2.4% |
Low |
|
8:00 |
EUR |
Italian PPI (MoM) (AUG) |
0.3% |
0.4% |
Low |
|
8:30 |
Index of Services (MoM) (JUL) |
1.5% |
-1.7% |
Low |
|
|
8:30 |
Index of Services (3Mo3M) (JUL) |
0.1% |
-0.1% |
Low |
|
|
9:00 |
EUR |
Euro-Zone CPI Estimate (YoY) (SEP) |
2.4% |
2.6% |
Medium |
|
9:00 |
EUR |
Italian CPI - EU Harmonized (YoY) (SEP P) |
2.7% |
2.7% |
Low |
|
9:00 |
EUR |
Italian CPI - EU Harmonized (MoM) (SEP P) |
1.3% |
0.0% |
Low |
|
9:00 |
EUR |
Italian CPI (NIC incl. tobacco) (MoM) (SEP P) |
-0.1% |
0.4% |
Low |
|
9:00 |
EUR |
Italian CPI (NIC incl. tobacco) (YoY) (SEP P) |
3.1% |
3.2% |
Low |
Critical Levels
|
CCY |
SUPPORT |
RESISTANCE |
|
1.2852 |
1.2989 |
|
|
1.6182 |
1.6297 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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