Euro, Aussie Dollar May Rise as Yen Falls on Greece Funding Deal

2015-03-31 05:00:00

Talking Points:

Euro to Look Past CPI Data, Focus on Greece Debt Negotiations
Greek Deal May Boost Aussie and NZ Dollar, Boost Japanese Yen
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The preliminary set of March Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, rising for a second consecutive month. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook.

Rather, the spotlight is likely to remain on Greece. Athens submitted a list of proposed reforms on Friday. The markets now await the verdict on whether the “institutions” representing Greece’s creditors – the EU, the ECB and the IMF – will approve it and unlock the next round of bailout funding. Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the Eurozone.

On balance, both sides of the negotiation are interested in a deal. Prime Minister Alexis Tsipras and company surely realize that a disorderly redenomination will probably compound the country’s economic woes and cost them their jobs. Meanwhile, EU and IMF officials no doubt prefer to avoid a “Grexit” scenario for fear of the precedent it may set. On balance, this means that some kind of accommodation is more likely than not.

An accord that prevents a default and keeps Greece in the currency bloc is likely to prove supportive for the single currency. Follow-through may be somewhat limited however as on-going ECB QE casts a dark cloud over the near-term outlook. It may likewise boost overall risk appetite, sending the sentiment-geared Australian and New Zealand Dollars upward while punishing the safe-haven Japanese Yen. Needless to say, failing to reach a deal stands to produce the opposite response.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:45	NZD	Building Permits (MoM) (FEB)	-6.3%	-	-4.6%
22:30	AUD	ANZ Roy Morgan Weekly Consumer Conf	112.3	-	111.4
23:05	GBP	GfK Consumer Confidence (MAR)	4	2	1
23:50	JPY	Loans & Discounts Corp (YoY) (FEB)	3.22%	-	2.91%
0:00	AUD	HIA New Home Sales (MoM) (FEB)	1.1%	-	1.8%
0:00	NZD	ANZ Activity Outlook (MAR)	42.2	-	40.9
0:00	NZD	ANZ Business Confidence (MAR)	35.8	-	34.4
0:30	AUD	Private Sector Credit (MoM) (FEB)	0.5%	0.5%	0.6%
0:30	AUD	Private Sector Credit (YoY) (FEB)	6.2%	6.3%	6.1%
2:00	NZD	Money Supply M3 (YoY) (FEB)	6.6%	-	6.2%
4:00	JPY	Vehicle Production (YoY) (FEB)	-5.3%	-	-9.7%
5:00	JPY	Housing Starts (YoY) (FEB)		-6.8%	-13.0%
5:00	JPY	Annualized Housing Starts (FEB)		0.877M	0.864M
5:00	JPY	Construction Orders (YoY) (FEB)		-	27.5%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:00	EUR	German Retail Sales (MoM) (FEB)	-0.7%	2.3%	Medium
6:00	EUR	German Retail Sales (YoY) (FEB)	3.4%	5.3%	Medium
7:55	EUR	German Unemployment Change (MAR)	-12K	-20K	Medium
7:55	EUR	German Unemployment Rate (MAR)	6.5%	6.5%	Medium
8:30	GBP	Current Account Balance (4Q)	-22.0B	-27.0B	Low
8:30	GBP	GDP (QoQ) (4Q F)	0.5%	0.50%	Medium
8:30	GBP	GDP (YoY) (4Q F)	2.7%	2.7%	Medium
8:30	GBP	Total Business Investment (QoQ) (4Q F)	-	-1.4%	Low
8:30	GBP	Total Business Investment (YoY) (4Q F)	-	2.1%	Low
8:30	GBP	Index of Services (MoM) (JAN)	0.3%	0.6%	Low
8:30	GBP	Index of Services (3M/3M) (JAN)	0.8%	0.8%	Low
8:30	GBP	Lloyds Business Barometer (MAR)	-	45	Low
9:00	EUR	Eurozone Unemployment Rate (FEB)	11.2%	11.2%	Medium
9:00	EUR	Eurozone CPI Estimate (YoY) (MAR)	-0.1%	-0.3%	High
9:00	EUR	Eurozone CPI Core (YoY) (MAR A)	0.7%	0.7%	High