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Euro Drops on Greece Fears, Pound Looks to PMI for BOE Rates Cues

Euro Drops on Greece Fears, Pound Looks to PMI for BOE Rates Cues

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Euro Likely to Look Beyond German CPI Gain, Drops on Greece Worries
  • British Pound Eyeing UK Manufacturing PMI for BOE Rates Outlook Cues
  • See Economic News Directly on Your Charts with the DailyFX News App

The Euro underperformed at the start of the trading week, falling as much as 0.4 percent on average against its top counterparts. The move appeared to reflect Greece-related worries amid concerns that Athens will be unable to repay over €300 million due to the IMF on Friday, triggering events leading to insolvency and a possible ejection from the Eurozone.

The Australian and New Zealand Dollars proved best-supported on the session, adding as much as 0.6 and 0.4 percent. The move appeared corrective after the two currencies suffered the deepest losses among the majors against the US Dollar last week. A pickup in Chinese Manufacturing PMI may have also helped. The gauge advanced to 50.2, showing the pace of factory-sector activity growth hit the fastest since November 2014.

May’s UK Manufacturing PMI data headlines the economic calendar in European trading hours. A rebound to 52.5 is expected after the index dropped to a seven-month low at 51.9 in April. UK economic news-flow has increasingly underperformed relative to consensus forecasts over recent months, opening the door for a downside surprise. Such an outcome may weigh on the British Pound as traders push out the expected timeline for the first post-crisis BOE interest rate hike.

The preliminary set of May German CPI data is likewise due to cross the wires. The headline year-on-year inflation rate is expected to rise to 0.7 percent, the highest in seven months. The outcome seems unlikely to meaningfully drive the Euro however considering its limited implications for near-term ECB policy bets.

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Asia Session

GMTCCYEVENTACTEXPPREV
23:30AUDAiG Perf of Mfg Index (MAY)52.3-48.0
23:50JPYCapital Spending (YoY) (1Q)7.3%-0.2%2.8%
23:50JPYCapital Spending Ex Software (1Q)8.1%2.0%3.9%
23:50JPYCompany Profits (1Q)0.4%-11.6%
23:50JPYCompany Sales (1Q)-0.5%-2.4%
23:50JPYLoans & Discounts Corp (YoY) (APR)2.63%-3.01%
00:30AUDTD Securities Inflation (MoM) (MAY)0.3%-0.3%
00:30AUDTD Securities Inflation (YoY) (MAY)1.4%-1.4%
01:00CNYManufacturing PMI (MAY)50.250.350.1
01:00CNYNon-manufacturing PMI (MAY)53.2-53.4
01:30AUDCompany Operating Profit (QoQ) (1Q)0.2%0.0%-0.4%
01:30AUDInventories SA (QoQ) (1Q)0.4%0.1%-0.8%
01:30AUDBuilding Approvals (MoM) (APR)-4.4%-1.8%2.9%
01:30AUDBuilding Approvals (YoY) (APR)16.3%20.5%24.6%
01:35JPYMarkit/JMMA Japan Manufacturing PMI (MAY F)50.9-50.9
01:45CNYHSBC China Manufacturing PMI (MAY F)49.249.249.1
05:00JPYVehicle Sales (YoY) (MAY)1.4%-5.0%
06:30AUDRBA Commodity Index AUD (MAY)79.2-81.0
06:30AUDRBA Commodity Index SDR (YoY) (MAY)-19.5%--20.7%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:30CHFManufacturing PMI (MAY)47.847.9Medium
07:45EURMarkit/ADACI Italy Manufacturing PMI (MAY)53.653.8Low
07:50EURMarkit France Manufacturing PMI (MAY F)49.349.3Low
07:55EURMarkit/BME Germany Manufacturing PMI (MAY F)51.451.4Medium
08:00EURMarkit Eurozone Manufacturing PMI (MAY F)52.352.3Medium
08:30GBPMarkit UK PMI Manufacturing SA (MAY)52.551.9High
12:00EURGerman CPI (MoM) (MAY P)0.1%0.0%High
12:00EURGerman CPI (YoY) (MAY P)0.7%0.5%High
12:00EURGerman CPI - EU Harmonized (MoM) (MAY P)0.1%-0.1%Medium
12:00EURGerman CPI - EU Harmonized (YoY) (MAY P)0.6%0.3%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.08131.08931.09401.09731.10201.10531.1133
GBPUSD1.50801.51851.52381.52901.53431.53951.5500

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

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