Forex Analysis: Sideways Trade Likely Before Friday NFP, ISM Data

2013-01-31 08:43:00 Ilya Spivak, Head Strategist, APAC

Forex markets are likely to find themselves in consolidation mode as investors brace for Friday’s release of US Nonfarm Payrolls and ISM data.

Talking Points

Euro Unlikely to Find Fireworks in German Unemployment, Inflation Data
S&P 500 Futures Hint Risk Trends to Consolidate Before Friday’s Event Risk
Aussie, Kiwi Dollars Fall While Yen Gains as Stocks Drift Lower Overnight

January’s German Consumer Price Index figures headline the economic calendar in European hours. The headline inflation is expected to fall to 2 percent, down from 2.1 percent in the prior month. The print falls squarely in line with the medium-term trend average and seems unlikely to materially dislodge priced-in ECB monetary policy expectations (absent a major deviation from forecasts). As such, the data’s implications for the Euro are probably limited. The Unemployment report is likewise seen producing generally status-quo results.

The US data docket is also relatively lackluster, suggesting markets may settle into consolidation mode ahead of Friday’s burst of high-profile event risk as the monthly Nonfarm Payrolls and ISM Manufacturing metrics cross the wires. S&P 500 index futures are trading flat in late overnight trade, pointing to flat risk sentiment trends and reinforcing the case for a lull in volatility.

Forex markets traded mostly sideways in Asia. The Australian and New Zealand Dollars narrowly underperformed while the Yen advanced as regional stock exchanges probed slightly lower, weighing on the risk-anchored high yielders while buoying the safety-linked Japanese unit.

Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
20:00	NZD	Reserve Bank of New Zealand Rate Decision	2.5%	2.5%	2.5%
23:50	JPY	Industrial Production (MoM) (DEC P)	2.5%	4.1%	-1.4%
23:50	JPY	Industrial Production (YoY) (DEC P)	-7.8%	-5.6%	-5.5%
23:50	JPY	Loans & Discounts Corp (YoY) (DEC)	1.0%	-	0.4%
0:00	AUD	HIA New Home Sales (MoM) (DEC)	6.2%	-	3.0% (R-)
0:01	GBP	GfK Consumer Confidence Survey (JAN)	-26	-28	-29
0:30	AUD	Private Sector Credit (MoM) (DEC)	0.4%	0.2%	0.0%
0:30	AUD	Private Sector Credit (YoY) (DEC)	3.6%	3.4%	3.5%
0:30	AUD	Export Price Index (QoQ) (4Q)	-2.4%	-1.5%	-6.4%
0:30	AUD	Import Price Index (QoQ) (4Q)	0.3%	0.4%	-2.4%
1:30	JPY	Labor Cash Earnings (YoY) (DEC)	-1.4%	-	-0.8% (R+)
2:00	NZD	Money Supply M3 (YoY) (DEC)	6.0%	-	5.5% (R+)
4:00	JPY	Vehicle Production (YoY) (DEC)	-17.2%	-	-8.4%
5:00	JPY	Housing Starts (YoY) (DEC)	10.0%	13.5%	10.3%
5:00	JPY	Annualized Housing Starts (DEC)	0.880M	0.895M	0.906M (R-)
5:00	JPY	Construction Orders (YoY) (DEC)	4.8%	-	-2.1%

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
7:00	GBP	Nationwide House Prices s.a. (MoM) (JAN)	0.5% (A)	0.0% (R+)	Medium
7:00	GBP	Nationwide House Prices n.s.a. (YoY) (JAN)	0.0% (A)	-1.0%	Medium
7:00	EUR	German Retail Sales (MoM) (DEC)	-1.7% (A)	0.6% (R-)	Medium
7:00	EUR	German Retail Sales (YoY) (DEC)	-4.7% (A)	-0.6% (R+)	Medium
8:00	CHF	SNB Releases 4Q Currency Holdings	-	-	Medium
8:55	EUR	German Unemployment Rate s.a. (JAN)	6.9%	6.9%	High
8:55	EUR	German Unemployment Change (JAN)	8K	3K	High
13:00	EUR	German CPI (MoM) (JAN P)	-0.4%	0.9%	High
13:00	EUR	German CPI (YoY) (JAN P)	2.0%	2.1%	High
13:00	EUR	German CPI - EU Harmonised (MoM) (JAN P)	-0.5%	0.9%	Low
13:00	EUR	German CPI - EU Harmonised (YoY) (JAN P)	2.0%	2.0%	Low