Euro May Rise as ECB Leaves Markets Wanting

2015-12-03 07:35:00

Talking Points:

Euro May Turn Higher as ECB Stimulus Expansion Leaves Markets Wanting
Aussie, Kiwi Dollars Find Support in Ebbing RBNZ and RBNZ Rate Cut Bets
Canadian Dollar Soars Alongside Oil Prices After Saudi Output Cut Rumor

All eyes have turned to the monetary policy announcement from the European Central Bank, with Mario Draghi and company are widely expected to expand monetary stimulus. Options include broadening the scope of QE-eligible assets, scrapping the program’s September 2016 end date, increasing the size of monthly purchases from the current €60 billion and pushing the deposit rate deeper into negative territory from the current -20bps.

The markets seem primed for a big-splash accommodative gesture, raising the bar on the ECB to deliver a dovish-enough result to mollify investors and increasing the threat of disappointment. If traders are left unimpressed, the Euro is likely to rise amid profit-taking on short positions while broad-based risk appetite deteriorates, weighing on sentiment-linked FX including the Australian and New Zealand Dollars.

The Kiwi returned to the offensive overnight following yesterday’s corrective pullback. The move tracked rising front-end bond yields, pointing to fading RBNZ rate cut speculation as the driving catalyst. The Aussie came under early selling pressure following disappointing Trade Balance data. Here too however, an improving policy outlook proved supportive and largely offset data-inspired losses.

The Canadian Dollar raced higher after Energy Intelligence (EI) reported that Saudi Arabia may propose a 1 million barrel output cut to stabilize global oil prices at some point in 2016. The news sent crude oil prices sharply higher, pulling the Loonie upward along the way. The kingdom is said to condition its acceptance of a cut on participation from non-OPEC producers as well as Iran and Iraq. EI cited an unidentified OPEC delegate as the source of the story.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:45	NZD	Value of All Buildings SA (QoQ) (3Q)	0.5%	1.8%	1.6%
22:30	AUD	AiG Perf of Services Index (NOV)	48.2	-	48.9
23:50	JPY	Loans & Discounts Corp (YoY) (OCT)	3.32%	-	2.87%
00:00	AUD	HIA New Home Sales (MoM) (OCT)	-3.0%	-	-4.0%
00:30	AUD	Trade Balance (A$) (OCT)	-3305M	-2600M	-2406M
01:35	JPY	Nikkei Japan PMI Services (NOV)	51.6	-	52.2
01:35	JPY	Nikkei Japan PMI Composite (NOV)	52.3	-	52.3
01:45	CNH	Caixin China PMI Composite (NOV)	50.5	-	49.9
01:45	CNH	Caixin China PMI Services (NOV)	51.2	-	52.0
06:30	JPY	BOJ’s Kiuchi Speaks in Tokyo	-	-	-

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
08:45	EUR	Markit/ADACI Italy Services PMI (NOV)	53.9	53.4	Low
08:45	EUR	Markit/ADACI Italy Composite PMI (NOV)	-	53.9	Low
08:50	EUR	Markit France Services PMI (NOV F)	51.3	51.3	Low
08:50	EUR	Markit France Composite PMI (NOV F)	51.3	51.3	Low
08:55	EUR	Markit Germany Services PMI (NOV F)	55.6	55.6	Medium
08:55	EUR	Markit/BME Germany Composite PMI (NOV F)	54.9	54.9	Medium
09:00	EUR	Markit Eurozone Services PMI (NOV F)	54.6	54.6	Medium
09:00	EUR	Markit Eurozone Services PMI (NOV F)	54.6	54.6	Medium
09:00	EUR	Markit Eurozone Composite PMI (NOV F)	54.4	54.4	Medium
09:30	GBP	Official Reserves Changes (NOV)	-	$16M	Low
09:30	GBP	Markit/CIPS UK Services PMI (NOV)	55.0	54.9	High
09:30	GBP	Markit/CIPS UK Composite PMI (NOV)	55.0	55.4	High
10:00	EUR	Eurozone Retail Sales (MoM) (OCT)	0.2%	-0.1%	Medium
10:00	EUR	Eurozone Retail Sales (YoY) (OCT)	2.6%	2.9%	Medium
12:45	EUR	ECB Main Refinancing Rate (DEC 3)	0.05%	0.05%	High
12:45	EUR	ECB Deposit Facility Rate (DEC 3)	-0.30%	-0.20%	High
12:45	EUR	ECB Marginal Lending Facility (DEC 3)	0.30%	0.30%	High
13:30	EUR	ECB Draghi Holds Press Conference	-	-	High