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Forex Analysis: Euro at Risk on German Jobs Data, Yen Higher on BOJ

Forex Analysis: Euro at Risk on German Jobs Data, Yen Higher on BOJ

Ilya Spivak, Head Strategist, APAC

The Euro may fall as another rise in German unemployment stokes ECB rate cut expectations. The Yen rose as the BOJ proved modest in expanding stimulus.

Talking Points

  • Euro May Fall as German Unemployment Gain Boosts ECB Rate Cut Bets
  • Japanese Yen Higher in Asia as BOJ Stimulus Boost Meets Expectations

German Unemployment figures headline the economic calendar in European hours. Expectations call for the economy to shed 10,000 jobs in October, pushing the unemployment rate higher to 6.9 percent. Job losses have been steadily mounting in the Eurozone’s largest economy, with the ranks of the unemployed rising for six consecutive months for a cumulative 54,000 increase over the second and third quarters. Another push the same direction may reinforce signs of deepening weakness seen in last week’s dismal PMI readings, stoking ECB rate cut expectations and weighing on the Euro.

The Japanese Yen outperformed in overnight trade after the Bank of Japan announced an expansion of stimulus measures that fell on the low end of forex traders’ expectations. Policymakers expanded asset purchases by ¥11 trillion. Reports circling the wires before the announcement called for as much as a ¥20 trillion expansion. The currency’s gains may prove fleeting however considering the BOJ also forecast that inflation would come in below its 1 percent target through the 2014 fiscal year, meaning additional efforts to loosen monetary policy are likely on the horizon.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

JPY

Jobless Rate (SEP)

4.2%

4.2%

4.2%

23:30

JPY

Job-To-Applicant Ratio (SEP)

0.81

0.83

0.83

23:30

JPY

Household Spending (YoY) (SEP)

-0.9%

0.80%

1.8%

23:50

JPY

Industrial Production (YoY) (SEP P)

-8.1%

-7.1%

-4.6%

23:50

JPY

Industrial Production (MoM) (SEP P)

-4.1%

-3.1%

-1.6%

0:00

AUD

HIA New Home Sales (MoM) (SEP)

-3.7%

-

-5.3%

4:00

JPY

Vehicle Production (YoY) (SEP)

-12.4%

-

4.5%

5:49

JPY

Bank of Japan Rate Decision

0.10%

0.10%

0.10%

Euro Session: What to Expect

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

CHF

UBS Consumption Indicator (SEP)

1.07 (A)

1.02

Low

8:00

EUR

Spain GDP (QoQ)

-0.4%

-0.4%

Medium

8:00

EUR

Spain GDP (YoY)

-1.7%

-1.3%

Medium

8:00

EUR

ECB President Draghi Speaks in Frankfurt

-

-

Medium

8:55

EUR

German Unemployment Rate (OCT)

6.9%

6.8%

High

8:55

EUR

German Unemployment Change (OCT)

10K

9K

High

10:00

EUR

Euro-Zone Business Climate Indicator (OCT)

-1.42

-1.34

Low

10:00

EUR

Euro-Zone Consumer Confidence (OCT F)

-25.6

-25.6

Medium

10:00

EUR

Euro-Zone Services Confidence (OCT)

-13

-12

Low

10:00

EUR

Euro-Zone Economic Confidence (OCT)

84.5

85

Low

10:00

EUR

Euro-Zone Industrial Confidence (OCT)

-17

-16.1

Low

10:00

EUR

Italy to Sell €7B in 5- and 10-year Bonds

-

-

Medium

11:00

GBP

CBI Reported Sales (OCT)

8

6

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2869

1.3005

GBPUSD

1.5985

1.6103

--- 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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