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Pound at Risk on Dovish BOE Testimony, Euro to Look Past German GDP

Pound at Risk on Dovish BOE Testimony, Euro to Look Past German GDP

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Aussie, NZ Dollars Fall as Yen Gains Amid Risk Aversion in Overnight Trade
  • Euro May Not Find a Meaningful Volatility Trigger in German GDP Revision
  • British Pound at Risk if Dovish BOE Testimony Weighs on Rate Hike Outlook

The Australian and New Zealand Dollars underperformed in overnight trade, sliding as much as 0.5 and 0.6 percent respectively against their leading counterparts. The moves tracked a drop in S&P 500 index futures, pointing to risk aversion as the catalyst behind selling pressure facing the sentiment-geared currencies. The safety-linked Japanese Yen advanced, adding as much as 0.5 percent.

Looking ahead, a revised set of German GDP figures is expected to confirm preliminary estimates showing output grew 0.1 percent in the third quarter. The year-on-year growth is expected to register at 1.2 percent, the lowest since the three months through December 2013.

The outcome may have a relatively modest impact on the Euroconsidering its limited implications for the near-term ECB policy. The central bank introduced a diverse medley of stimulus measures over recent months and is probably in wait-and-see for now while President Mario Draghi and company continue to implement and evaluate these efforts.

Meanwhile, a roundup of Bank of Englandofficials including Governor Mark Carney, Deputy Governor Jon Cunliffe as well as MPC members Kristin Forbes and Ian McCafferty are due to speak before Parliament’s Treasury Select Committee. The dovish tone of the latest Quarterly Inflation Report will probably feature prominently in the discussion, which may weigh on the British Pound if traders walk away from the outing with a sense of a longer delay in seeing an interest rate hike.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:30

AUD

ANZ Roy Morgan Weekly Consumer Conf

114.3

-

113.0

23:50

JPY

PPI Services (YoY) (OCT)

3.6%

3.6%

3.5%

23:50

JPY

BOJ October Meeting Minutes

-

-

-

1:00

JPY

BOJ's Kuroda Speaks in Nagoya

-

-

-

2:00

NZD

RBNZ 2yr Inflation Expectation

2.06%

-

2.23%

2:00

CNY

Conference Board Leading Index (OCT)

305.7

-

303.0

4:00

JPY

BOJ's Nakaso Speaks in Tokyo

-

-

-

4:45

JPY

BOJ's Kuroda Holds Press Conference

-

-

-

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

German GDP s.a. (QoQ) (3Q F)

0.1%

0.1%

Medium

7:00

EUR

German GDP w.d.a. (YoY) (3Q F)

1.2%

1.2%

Medium

7:00

EUR

German GDP n.s.a. (YoY) (3Q F)

1.2%

1.2%

Medium

7:00

EUR

German Domestic Demand (3Q)

-0.3%

0.1%

Low

7:00

EUR

German Private Consumption (3Q)

0.3%

0.1%

Low

7:00

EUR

German Government Spending (3Q)

0.2%

0.1%

Low

7:00

EUR

German Capital Investment (3Q)

-0.8%

-2.3%

Low

7:00

EUR

German Construction Investment (3Q)

-0.3%

-4.2%

Low

7:00

EUR

German Exports (3Q)

1.4%

0.9%

Low

7:00

EUR

German Imports (3Q)

1.0%

1.6%

Low

9:05

AUD

RBA's Lowe Speaks in Sydney

-

-

Low

9:30

GBP

BBA Loans for House Purchase (OCT)

38500

39271

Low

10:00

EUR

Bundesbank Financial Stability Report

-

-

Medium

10:00

GBP

BOE's Carney, Cunliffe, Forbes & McCafferty Testify

-

-

Medium

10:00

EUR

OECD Eurozone Econ Outlook

-

-

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.2246

1.2331

1.2387

1.2416

1.2472

1.2501

1.2586

GBPUSD

1.5511

1.5597

1.5652

1.5683

1.5738

1.5769

1.5855

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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