The Euro may rise as an improvement in March PMI data overshadows Cyprus-linked jitters while policymakers plot the next steps forward.
Talking Points
- Euro May Rise as PMIs Edge Higher while Cyprus, Italy Fears Simmer
- Pound Unlikely to Find Lasting Support in Improved Retail Sales Data
Preliminary estimates of March Eurozone PMI figures headline the economic calendar in European hours. The region-wide metric composite gauge is set to show that the pace of contraction in manufacturing- and service-sector activity moderated from the prior month. German PMIs are forecast to continue outperforming, with factory-sector activity seen growing at the fastest pace in 14 months. Meanwhile, German services are due to expand at a pace just a hair softer than the recent peak set in January, which marked the strongest performance since mid-2011.
On balance, this bodes well for the Euro. While the single currency continues to face headline risk from Cyprus and Italy, the level of intensity on both fronts has been reduced to a slow simmer as policymakers plot the next steps forward. That amounts to a lack of “new” bad news to maintain downward pressure beyond the negativity that has already found its way into exchange rates. With this in mind, signs of relative improvement on the economic growth front may reinforce the likelihood that the ECB will remain the only central bank in the G10 FX space to be engaged in monetary tightening (via early repayments of 3-year LTRO loans), offering support to the single currency.
Elsewhere on the docket, Spain is due to sell 2015, 2018 and 2023 bonds, with traders watching average yield levels and bid-to-cover readings to gauge regional sovereign risk jitters present in the markets. UK Retail Sales are set to rise 0.6 percent in February, marking the largest increase in nine months. The outcome may offer a modest boost to the British Pound but the currency’s ability to retain upward momentum seems decidedly limited. Chancellor of the Exchequer George Osborne held firm on the need for continued austerity while offering the Bank of England new flexibility to temporarily deviate from its 2 percent inflation target in the 2013 UK budget unveiled yesterday. That suggests monetary policy will be primary stimulus tool deployed to underpin the economy as it slides toward triple-dip recession. Needless to say this bodes ill for Sterling and we continue to hold short GBPUSD.
Asia Session:
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
21:45 |
NZD |
Gross Domestic Product (YoY) (4Q) |
3.0% |
2.3% |
2.0% |
21:45 |
NZD |
Gross Domestic Product (QoQ) (4Q) |
1.5% |
0.9% |
0.2% |
23:50 |
JPY |
Merchandise Trade Balance Total (¥) (FEB) |
-777.5B |
-855.9B |
-1630.9B |
23:50 |
JPY |
Adjusted Merchandise Trade Balance (¥) (FEB) |
-1086.6B |
-1102.8B |
-737.3B |
23:50 |
JPY |
Merchandise Trade Exports (YoY) (FEB) |
-2.9 |
-1.7 |
6.4 |
23:50 |
JPY |
Merchandise Trade Imports (YoY) (FEB) |
11.9 |
15.0 |
7.3 |
0:00 |
AUD |
CBAHIA House Affordability (4Q) |
68.9 |
- |
65.8 |
0:30 |
AUD |
RBA Foreign Exchange Transaction (A$) (FEB) |
328M |
- |
393M |
1:45 |
CNY |
51.7 |
50.8 |
50.4 |
|
2:00 |
NZD |
Credit Card Spending s.a. (MoM) (FEB) |
3.3% |
- |
-2.5% |
2:00 |
NZD |
Credit Card Spending (YoY) (FEB) |
4.7% |
- |
0.5% |
4:30 |
JPY |
All Industry Activity Index (MoM) (JAN) |
-1.3% |
1.8% |
|
5:00 |
JPY |
Supermarket Sales (YoY) (FEB) |
-4.7% |
Euro Session:
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
7:00 |
CHF |
Trade Balance (CHF) (FEB) |
2.00B |
2.12B |
Medium |
7:00 |
CHF |
Exports (MoM) (FEB) |
- |
3.7% |
Low |
7:00 |
CHF |
Imports (MoM) (FEB) |
- |
-0.5% |
Low |
7:00 |
JPY |
Convenience Store Sales (YoY) (FEB) |
- |
-0.9% |
Low |
8:00 |
EUR |
French PMI Manufacturing (MAR P) |
44.2 |
43.9 |
Medium |
8:00 |
EUR |
French PMI Services (MAR P) |
44.0 |
43.7 |
Medium |
8:00 |
CHF |
Money Supply M3 (YoY) (FEB) |
- |
9.2% |
Low |
8:30 |
EUR |
German PMI Manufacturing (MAR A) |
50.5 |
50.3 |
High |
8:30 |
EUR |
German PMI Services (MAR A) |
55.0 |
54.7 |
High |
9:00 |
EUR |
Euro-Zone PMI Services (MAR A) |
48.2 |
47.9 |
High |
9:00 |
EUR |
Euro-Zone PMI Manufacturing (MAR A) |
48.2 |
47.9 |
High |
9:00 |
EUR |
Euro-Zone PMI Composite (MAR A) |
48.2 |
47.9 |
High |
9:30 |
EUR |
Spain to Sell 2015-23 Bonds |
- |
- |
Medium |
9:30 |
GBP |
Public Sector Net Borrowing (£) (FEB) |
8.2B |
-9.9B |
Low |
9:30 |
GBP |
Public Finances (PSNCR) (£) (FEB) |
-12.0B |
-35.6B |
Low |
9:30 |
GBP |
PSNB ex Interventions (FEB) |
8.0B |
-11.4B |
Low |
9:30 |
GBP |
Retail Sales w/Auto Fuel (MoM) (FEB) |
0.4% |
-0.6% |
Low |
9:30 |
GBP |
Retail Sales w/Auto Fuel (YoY) (FEB) |
0.5% |
-0.6% |
Low |
9:30 |
GBP |
Retail Sales ex Auto Fuel (MoM) (FEB) |
0.6% |
-0.5% |
Medium |
9:30 |
GBP |
Retail Sales ex Auto Fuel (YoY) (FEB) |
1.2% |
0.2% |
Medium |
11:00 |
GBP |
CBI Trends Total Orders (MAR) |
-15 |
-14 |
Low |
11:00 |
GBP |
CBI Trends Selling Prices (MAR) |
17 |
20 |
Low |
Critical Levels:
CCY |
SUPPORT |
RESISTANCE |
EURUSD |
1.2867 |
1.2989 |
GBPUSD |
1.5023 |
1.5182 |
--- 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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