Talking Points:
- Euro May Not Find Lasting Support in Upbeat Headline PMI Result
- Aussie Dollar Sold as Soft Chinese PMI Data Weighs on RBA Outlook
- Japanese Yen Outperforms as Nikkei Drop Fuels Safe-Haven Demand
The preliminary set of January’s Eurozone PMI figures headlines the economic calendar in European hours. The region-wide aggregate index is expected to show manufacturing- and service-sector growth accelerated in January, with activity expanding at the fastest pace since June 2011. An upbeat result may not necessarily translate into lasting Euro strength however as traders what the outcome means for ECB monetary policy prospects.
December’s PMI datahighlighted the quandary facing the central bank: while overall growth picked up, pricing trends remained dismal. The ECB is mandated to focus exclusively on price stability. That means improving output dynamics are no more a reason to abandon today’s dovish posture than dismal performance had been a stimulus trigger as the region struggled with double-dip recession last year.
On balance, that suggests an initial Euro rally in the wake of a supportive headline reading may prove short-lived as traders pick apart the report’s details for signs of lingering deflation threats. If the trend in pricing activity continues to disappoint, selling pressure my swiftly emerge to punish the single currency as ECB easing bets build out. We remain short EUR/USD.
The Australian Dollar underperformed in overnight trade after disappointing Chinese PMI data weighed against RBA policy expectations. The report likewise undermined Asian stock performance amid worries about performance in the region’s largest economy, pushing down the benchmark Nikkei 225 index and boosting haven demand for the Japanese Yen.
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Asia Session
|
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
|
21:00 |
ANZ Job Advertisements (MoM) (DEC) |
-0.7% |
- |
-2.5% |
|
|
21:30 |
Business NZ PMI (DEC) |
56.4 |
- |
57.0 |
|
|
0:00 |
AUD |
Consumer Inflation Expectation (JAN) |
2.3% |
- |
2.1% |
|
0:00 |
ANZ Consumer Confidence Index (JAN) |
135.8 |
- |
129.4 |
|
|
0:00 |
ANZ Consumer Confidence (MoM) (JAN) |
4.9% |
- |
0.8% |
|
|
1:45 |
CNY |
HSBC/Markit Flash Manufacturing PMI (JAN) |
49.6 |
50.4 |
50.5 |
|
2:00 |
CNY |
Conference Board Leading Index (DEC) |
278.8 |
- |
277.6 |
|
5:00 |
JPY |
BOJ Monthly Economic Report (JAN) |
- |
- |
- |
European Session
|
GMT |
CCY |
EVENT |
EXP/ACT |
PREV |
IMPACT |
|
8:00 |
EUR |
French PMI Services (JAN P) |
47.8 |
Low |
|
|
8:00 |
EUR |
French PMI Manufacturing (JAN P) |
47 |
Low |
|
|
8:30 |
EUR |
German PMI Services (JAN A) |
53.9 |
53.5 |
Medium |
|
8:30 |
EUR |
German PMI Manufacturing (JAN A) |
54.4 |
54.3 |
Medium |
|
9:00 |
EUR |
Euro-Zone Current Account s.a. (€) (NOV) |
- |
21.8B |
Low |
|
9:00 |
EUR |
Euro-Zone Current Account n.s.a. (€) (NOV) |
- |
26.2B |
Low |
|
9:00 |
EUR |
Euro-Zone PMI Manufacturing (JAN A) |
53.0 |
52.7 |
Medium |
|
9:00 |
EUR |
Euro-Zone PMI Composite (JAN A) |
52.5 |
52.1 |
Medium |
|
9:00 |
EUR |
Euro-Zone PMI Services (JAN A) |
51.4 |
51 |
Medium |
Critical Levels
|
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
|
1.3459 |
1.3507 |
1.3527 |
1.3555 |
1.3575 |
1.3603 |
1.3651 |
|
|
1.6266 |
1.6402 |
1.6488 |
1.6538 |
1.6624 |
1.6674 |
1.6810 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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