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FOREX - Euro at Risk as PMIs Stir Rate Cut Bets, Aussie Outperforms

FOREX - Euro at Risk as PMIs Stir Rate Cut Bets, Aussie Outperforms

2012-10-24 06:25:00
Ilya Spivak, Head Strategist, APAC
Share:

The Euro is at risk as October’s PMI data aim to point toward continued recession, hinting at ECB rate cuts ahead. The Aussie soared in Asia as CPI topped estimates.

Talking Points

  • Euro May Fall as PMI Data Rekindles ECB Rate Cut Expectations
  • Bounce in German IFO Unlikely to Prove Materially Supportive
  • Australian Dollar Outperforms as CPI Bolsters RBA Policy Outlook

The European economic calendar heats up today, with the spotlight on October’s preliminary set of Eurozone manufacturing- and service-sector PMI figures. The region-wide composite gauge is expected to show activity shrank for the ninth consecutive month. Similarly bleak readings are broadly expected from PMIs tracking Germany and France. Such outcomes may rekindle bets on additional ECB stimulus measures as recession continues to grip the currency bloc, weighing on the Euro.

Separately, the German IFO gauge of business confidence is forecast to show mild improvement. The headline Business Climate reading is seen edging higher to 101.6 in October after hitting a 22-month low in September. The narrow improvement seems unlikely to offer much support for the single currency against a backdrop of worrying PMI figures, particularly considering the persistent slide in sentiment since May.

The Australian Dollar outperformed in overnight trade, adding as much as 0.5 percent against its top counterparts. The rally came as third-quarter Australian CPI figures topped economists’ expectations, pushing forex traders to downgrade expectations for additional RBA interest rate cuts. The data showed the annual pace of inflation accelerated to 2 percent, marking the highest reading since the three months through January 2011.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

0:00

AUD

DEWR Internet Skilled Vacancies (MoM) (SEP)

-3.7%

-

-3.4% (R-)

0:30

AUD

Consumer Prices Index (QoQ) (3Q)

1.4%

1.0%

0.5%

0:30

AUD

Consumer Prices Index (YoY) (3Q)

2.0%

1.6%

1.2%

0:30

AUD

RBA Trimmed Mean (QoQ) (3Q)

0.7%

0.6%

0.6% (R+)

0:30

AUD

RBA Trimmed Mean (YoY) (3Q)

2.4%

2.2%

2.0%

0:30

AUD

RBA Weighted Median (QoQ) (3Q)

0.8%

0.6%

0.7%

0:30

AUD

RBA Weighted Median (YoY) (3Q)

2.6%

2.2%

2.2%

1:45

CNY

HSBC Flash Manufacturing PMI (OCT)

49.1

-

47.9

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

French PMI Manufacturing (OCT P)

44.0

42.7

Medium

7:00

EUR

French PMI Services (OCT P)

45.4

45.0

Medium

7:30

EUR

German PMI Services (OCT A)

50.0

49.7

High

7:30

EUR

German PMI Manufacturing (OCT A)

48.0

47.4

High

8:00

EUR

German IFO – Expectations (OCT)

93.6

93.2

Medium

8:00

EUR

German IFO - Current Assessment (OCT)

110.0

110.3

Medium

8:00

EUR

German IFO - Business Climate (OCT)

101.6

101.4

Medium

8:00

EUR

Euro-Zone PMI Services (OCT A)

46.4

46.1

Medium

8:00

EUR

Euro-Zone PMI Manufacturing (OCT A)

46.5

46.1

Medium

8:00

EUR

Euro-Zone PMI Composite (OCT A)

46.5

46.1

High

8:00

EUR

Italian Consumer Confidence Ind. sa (OCT)

86.4

86.2

Low

9:00

EUR

Eurozone Government Debt (2Q)

-

-

Low

10:00

GBP

CBI Trends Selling Prices (OCT)

6

3

Low

10:00

GBP

CBI Trends Total Orders (OCT)

-6

-8

Low

10:00

GBP

CBI Business Optimism (OCT)

-2

-6

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2881

1.3005

GBPUSD

1.5903

1.6013

--- 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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