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US Dollar May Fall as Yen Gains on Disappointing US GDP Data

US Dollar May Fall as Yen Gains on Disappointing US GDP Data

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Soft 4Q US GDP Data May Punish US Dollar, Drive Japanese Yen Gains
  • Euro Unlikely to Find Potent Catalyst in Soft Eurozone Inflation Figures
  • See Economic News Directly on Your Charts with the DailyFX News App

January’s flash Eurozone CPI data headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to slip deeper into negative territory, registering a 0.5 percent decline to come within a hair of the all-time low (-0.6% y/y) recorded in July 2009.

While a soft outcome will support the case for aggressive monetary stimulus, its impact on the Euro may prove limited. The ECB unveiled a large QE effort just last week, meaning another soft CPI print will imply relatively little for the near-term outlook andthereby offer no impetus for outsized volatility.

Later in the day, the spotlight turns to the preliminary set of fourth-quarter US GDP figures. Economists are penciling in an annualized growth rate of 3 percent, marking a slowdown from the 5 percent surge notched up in the third quarter and brings the pace of expansion back toward the near-term trend average (2.8 percent).

US news-flow has dramatically deteriorated relative to consensus forecasts over recent weeks however. That suggests analysts’ models are overestimating the vigor of the world’s largest economy, opening the door for a downside surprise. Such an outcome may weigh on the US Dollar as traders push back Fed rate hike expectations. It may likewise drive risk aversion amid worries the about the inability of US growth to offset malaise in Europe and Asia, triggering an unwinding of carry trades and boosting the Japanese Yen.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Building Permits (MoM) (DEC)

-2.1%

-

10.5%

21:45

NZD

Net Migration s.a. (DEC)

4100

-

5000

23:30

JPY

Jobless Rate (DEC)

3.4%

3.5%

3.5%

23:30

JPY

Job-To-Applicant Ratio (DEC)

1.15

1.12

1.12

23:30

JPY

Household Spending (YoY) (DEC)

-3.4%

-2.3%

-2.5%

23:30

JPY

National CPI (YoY) (DEC)

2.4%

2.3%

2.4%

23:30

JPY

National CPI Ex-Fresh Food (YoY) (DEC)

2.5%

2.6%

2.7%

23:30

JPY

National CPI Ex Food, Energy (YoY) (DEC)

2.1%

2.1%

2.1%

23:30

JPY

Tokyo CPI (YoY) (JAN)

2.3%

2.2%

2.2%

23:30

JPY

Tokyo CPI Ex-Fresh Food (YoY) (JAN)

2.2%

2.2%

2.3%

23:30

JPY

Tokyo CPI Ex Food, Energy (YoY) (JAN)

1.7%

1.8%

1.8%

23:50

JPY

Industrial Production (MoM) (DEC P)

1.0%

1.2%

-0.5%

23:50

JPY

Industrial Production (YoY) (DEC P)

0.3%

0.3%

-3.7%

0:05

GBP

GfK Consumer Confidence Survey (JAN)

1

-2

-4

0:30

AUD

PPI (YoY) (4Q)

1.1%

-

1.2%

0:30

AUD

PPI (QoQ) (4Q)

0.1%

-

0.2%

0:30

AUD

Private Sector Credit (YoY) (DEC)

5.9%

5.9%

5.9%

0:30

AUD

Private Sector Credit (MoM) (DEC)

0.5%

0.5%

0.5%

2:00

NZD

Money Supply M3 (YoY) (DEC)

6.3%

-

5.9%

4:00

JPY

Vehicle Production (YoY) (DEC)

-2.5%

-

-12.2%

5:00

JPY

Housing Starts (YoY) (DEC)

-14.7%

-14.8%

-14.3%

5:00

JPY

Annualized Housing Starts (DEC)

0.883M

0.900M

0.888M

6:00

JPY

Construction Orders (YoY) (DEC)

7.5%

-

16.9%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

EUR

German Retail Sales (MoM) (DEC)

0.2% (A)

0.9%

Low

7:00

EUR

German Retail Sales (YoY) (DEC)

4.0% (A)

-1.0%

Low

8:00

CHF

KOF Leading Indicator (JAN)

97.0 (A)

98.8

Medium

9:30

GBP

Net Consumer Credit (DEC)

1.2B

1.3B

Low

9:30

GBP

Net Lending Sec. on Dwellings (DEC)

1.9B

2.1B

Low

9:30

GBP

Mortgage Approvals (DEC)

59.0K

59.0K

Medium

9:30

GBP

M4 Money Supply (MoM) (DEC)

-

0.0%

Low

9:30

GBP

M4 Money Supply (YoY) (DEC)

-

-2.8%

Low

9:30

GBP

M4 Ex IOFCs 3M Annualized (DEC)

-

2.9%

Low

10:00

EUR

Eurozone Unemployment Rate (DEC)

11.5%

11.5%

Medium

10:00

EUR

Eurozone CPI Estimate (YoY) (JAN)

-0.5%

-0.2%

High

10:00

EUR

Eurozone CPI - Core (YoY) (JAN A)

0.7%

0.7%

High

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.1105

1.1211

1.1265

1.1317

1.1371

1.1423

1.1529

GBPUSD

1.4797

1.4940

1.5003

1.5083

1.5146

1.5226

1.5369

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

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