Forex: Euro at Risk on Soft German CPI, Dollar May Rise on UofM Print

2014-03-28 05:57:00 Ilya Spivak, Head Strategist, APAC

Talking Points:

Euro May Extend Drop as Soft German CPI Fuels ECB Stimulus Bets
British Pound Likely to Overlook Final Revision of 4Q UK GDP Data
US Dollar May Bounce if UofM Revision Tops Economists’ Forecasts

March’s preliminary German CPI report headlines the economic calendar in European hours. Expectations call for the headline year-on-year inflation rate to decline to 1.1 percent, the lowest since August 2010. Weak price growth readings in the Eurozone’s largest economy may fuel concerns about continued disinflation region-wide and drive speculation about a near-term expansion of ECB stimulus efforts, weighing on the Euro. The single currency dropped to a three-week low yesterday.

The final revision of fourth-quarter UK GDP data is expected to match earlier estimates showing output grew 0.7 percent, confirming a marginal slowdown from the 0.8 percent increase recorded in the three months through September. Absent a material deviation from consensus forecasts, the release seems unlikely to yield a significant response from the British Pound considering its limited implications for the near-term direction of BOE monetary policy.

Later in the day, the spotlight shifts to February’s US Personal Consumption and Spending figures as well as the final revision of the March Consumer Confidence measure from the University of Michigan. While the former two data points are expected to print in line with 12-month trend averages and so may not inspire a hearty response from the markets, the latter is expected to be revised higher.

A larger upgrade in line with the better-than-expected outcome on an analogous indicator from the Conference Board earlier in the week may further erode doubts about Fed QE “taper” continuity. That stands to boost the yield attraction of the US Dollar, driving the benchmark currency upward from support at the March swing low.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
23:30	JPY	Household Spending (YoY) (FEB)	-2.5%	0.1%	1.1%
23:30	JPY	National CPI (YoY) (FEB)	1.5%	1.5%	1.4%
23:30	JPY	National CPI Ex-Fresh Food (YoY) (FEB)	1.3%	1.3%	1.3%
23:30	JPY	National CPI Ex Food, Energy (YoY) (FEB)	0.8%	0.8%	0.7%
23:30	JPY	Tokyo CPI (YoY) (MAR)	1.3%	1.2%	1.1%
23:30	JPY	Tokyo CPI Ex-Fresh Food (YoY) (MAR)	1.0%	0.9%	0.9%
23:30	JPY	Tokyo CPI Ex Food, Energy (YoY) (MAR)	0.4%	0.5%	0.5%
23:30	JPY	Jobless Rate (FEB)	3.6%	3.7%	3.7%
23:30	JPY	Job-To-Applicant Ratio (FEB)	1.05	1.05	1.04
23:50	JPY	Retail Trade (YoY) (FEB)	3.6%	3.5%	4.4%
23:50	JPY	Retail Trade s.a. (MoM) (FEB)	0.3%	0.1%	1.6%
23:50	JPY	Large Retailers' Sales (FEB)	1.3%	0.8%	0.0%
0:05	GBP	GFK Consumer Confidence (MAR)	-5	-6	-7

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:00	EUR	German Import Price Index (YoY) (FEB)	-2.4%	-2.3%	Low
7:00	EUR	German Import Price Index (MoM) (FEB)	0.2%	-0.1%	Low
8:00	CHF	KOF Institute Spring Economic Forecast	-	-	Low
9:30	GBP	GDP (QoQ) (4Q F)	0.7%	0.7%	Medium
9:30	GBP	GDP (YoY) (4Q F)	2.7%	2.7%	Medium
9:30	GBP	Total Business Investment (QoQ) (4Q F)	2.4%	2.4%	Low
9:30	GBP	Total Business Investment (YoY) (4Q F)	8.5%	8.5%	Low
9:30	GBP	Current Account (£) (4Q)	-13.8B	-20.7B	Low
9:30	GBP	Index of Services (MoM) (JAN)	0.3%	0.2%	Low
9:30	GBP	Index of Services (3M/3M) (JAN)	0.9%	0.8%	Low
9:30	GBP	Lloyds Business Barometer (MAR)	-	53	Low
10:00	EUR	Euro-Zone Services Confidence (MAR)	3.7	3.2	Low
10:00	EUR	Euro-Zone Economic Confidence (MAR)	101.3	101.2	Low
10:00	EUR	Euro-Zone Industrial Confidence (MAR)	-3.5	-3.4	Low
10:00	EUR	Euro-Zone Consumer Confidence (MAR F)	-	-9.3	Medium
10:00	EUR	Euro-Zone Business Climate Indicator (MAR)	0.38	0.37	Low
13:00	EUR	German CPI (MoM) (MAR P)	0.4%	0.5%	High
13:00	EUR	German CPI (YoY) (MAR P)	1.1%	1.2%	High
13:00	EUR	German CPI - EU Harmonized (MoM) (MAR P)	0.4%	0.5%	Medium
13:00	EUR	German CPI - EU Harmonized (YoY) (MAR P)	0.9%	1.2%	Medium