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Euro May Ignore German CPI as ECB Rate Decision Looms Large

Euro May Ignore German CPI as ECB Rate Decision Looms Large

Talking Points:

  • Euro May Overlook German CPI Data as ECB Rate Decision Looms Large
  • IMF Decision to Include Chinese Yuan into SDR to Pass with Little Fanfare
  • New Zealand Dollar Gains Alongside Yields on Improving RBNZ Outlook

German CPI figures headline the economic data docket in European trading hours. The benchmark year-on-year inflation rate is expected to tick narrowly higher to 0.4 percent in November from 0.3 percent in the prior month. The outcome seems unlikely to trigger a significant response from the Euro, with traders probably unwilling to commit to a firm directional bias ahead of the much-anticipated ECB policy announcement due later in the week.

The markets are likewise waiting for confirmation that the IMF has decided to include the Chinese Yuan into its SDR basket of reserve currencies. Christine Lagarde, the Fund’s Managing Director, issued a statement supporting staff recommendation to proceed with the move last week. As we’ve discussed in detail elsewhere, the announcement is unlikely to translate into a lasting, meaningful response from the financial markets in the near term.

The New Zealand Dollar outperformed in otherwise quiet overnight trade. The currency’s advance tracked an upward push in front-end bond yields, hinting at an improvement in prevailing RBNZ monetary policy expectations as the driving catalyst. Indeed, while investors continue to price in at least one rate cut over the coming 12 months, the probability of a 25bps reduction at next month’s meeting dropped to 48 percent from 56 percent at the close of trade last week.

Losing Money Trading Forex? This Might Be Why.

Asia Session

21:45NZDBuilding Permits (MoM) (OCT)5.1%--5.8%
23:30AUDTD Securities Inflation (MoM) (NOV)0.1%-0.0%
23:30AUDTD Securities Inflation (YoY) (NOV)1.8%-1.8%
23:50JPYIndustrial Production (MoM) (OCT P) 1.4%1.8%1.1%
23:50JPYIndustrial Production (YoY) (OCT P)-1.4%-0.9%-0.8%
23:50JPYRetail Trade (YoY) (OCT)1.8%0.9%-0.1%
23:50JPYRetail Sales (MoM) (OCT)1.1%0.3%0.8%
23:50JPYDept. Store, Supermarket Sales (OCT)2.9%3.0%1.7%
00:00NZDANZ Activity Outlook (NOV)32.0-23.7
00:00NZDANZ Business Confidence (NOV)14.6-10.5
00:30AUDCompany Operating Profit (QoQ) (3Q)1.3%1.0%-0.5%
00:30AUDInventories SA (QoQ) (3Q)0.1%0.0%0.2%
00:30AUDPrivate Sector Credit (MoM) (OCT)0.7%0.6%0.7%
00:30AUDPrivate Sector Credit (YoY) (OCT)6.7%6.6%6.6%
01:00JPYBOJ’s Kuroda Speaks in Nagoya ---
02:00NZDMoney Supply M3 (YoY) (OCT)7.7%-8.5%
04:00JPYVehicle Production (YoY) (OCT)-0.5%--2.6%
05:00JPYHousing Starts (YoY) (OCT)-2.5%2.6%2.6%
05:00JPYAnnualized Housing Starts (OCT)0.862M0.908M0.900M
05:00JPYConstruction Orders (YoY) (OCT)-25.2%-6.7%

European Session

07:00EURGerman Retail Sales (MoM) (OCT)0.4%0.0%Medium
07:00EURGerman Retail Sales (YoY) (OCT)2.9%3.4%Medium
08:00CHFKOF Leading Indicator (NOV)100.299.8Low
08:00CHFTotal Sight Deposits (NOV 27)-468.3BLow
08:00CHFDomestic Sight Deposits (NOV 27)-402.7BLow
09:30GBPNet Consumer Credit (OCT)1.3B1.3BLow
09:30GBPNet Lending Sec. on Dwellings (OCT)3.4B3.6BLow
09:30GBPMortgage Approvals (OCT)69.9K68.9KMedium
09:30GBPM4 Money Supply (MoM) (OCT)--1.0%Low
09:30GBPM4 Money Supply (YoY) (OCT)--0.6%Low
09:30GBPM4 Ex IOFCs 3M Annualised (OCT)3.0%4.0%Low
09:30GBPLloyds Business Barometer (NOV)-50.0Low
13:00EURGerman CPI (MoM) (NOV P) 0.1%0.0%High
13:00EURGerman CPI (YoY) (NOV P) 0.4%0.3%High
13:00EURGerman CPI - EU Harmonized (MoM) (NOV P) 0.1%0.0%Low
13:00EURGerman CPI - EU Harmonized (YoY) (NOV P) 0.3%0.2%Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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