Forex: Euro May Fall Further on Dovish Turn in ECB Commentary

2014-03-12 05:36:00

Ilya Spivak, Head Strategist, APAC

Talking Points:

US, European Economic Calendars Light on Fundamental Event Risk
Euro May Fall if ECB Officials Continue to Talk Up Stimulus Options
Australian Dollar Sold as Asian Stocks Drop on China Growth Fears

Another quiet day on the economic data front will put the spotlight on a busy ECB speaking calendar. No less than five of the central bank’s officials are due to cross the wires throughout the session. The Euro posted its largest daily drawdown in a week yesterday after comments from ECB Vice President Vitor Constancio and board member Sabine Lautenschlaeger.

The former said he and his colleagues were emphasizing slack in the economy at the March policy meeting and reminded markets that the ECB still has tools it can use to deliver stimulus, including rate cuts or quantitative easing. The latter echoed Constancio’s comments.

If this dovish rhetoric amounts to a concerted communication strategy from the Eurozone monetary authority, more of the same can be expected today, threatening to push the single currency lower as prices bump against support near the 1.38 figure against the US Dollar.

The Australian Dollar narrowly underperformed in overnight trade as a slide in Asian stock prices undermined demand for the sentiment-linked currency. The MSCI Asia Pacific regional benchmark index slide 1.4 percent in a move the newswires chalked up to swelling fears about a slowdown in China after this week’s disappointing economic data.

New to FX? START HERE!

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
23:30	AUD	Westpac Consumer Conf Index (MAR)	99.5	-	100.2
23:30	AUD	Westpac Consumer Confidence (MAR)	-0.7%	-	-3.0%
23:50	JPY	Tertiary Industry Index (MoM) (JAN)	0.9%	0.6%	-0.5%
23:50	JPY	Domestic CGPI (MoM) (FEB)	-0.2%	0.2%	0.2%
23:50	JPY	Domestic CGPI (YoY) (FEB)	1.8%	2.1%	2.5%
23:50	JPY	BSI Large All Industry (QoQ) (1Q)	12.7	-	8.3
23:50	JPY	BSI Large Manufacturing (QoQ) (1Q)	12.5	-	9.7
0:30	AUD	Home Loans (JAN)	0.0%	0.5%	-3.3%
0:30	AUD	Investment Lending (JAN)	-3.3%	-	2.5%
0:30	AUD	Value of Loans (MoM) (JAN)	1.5%	-	-2.1%
5:00	JPY	Consumer Confidence Index (FEB)	38.3	40.0	40.5

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
10:00	EUR	Euro-Zone Industrial Production (YoY) (JAN)	1.9%	0.5%	Medium
10:00	EUR	Euro-Zone Industrial Production (MoM) (JAN)	0.5%	-0.7%	Medium