Pound May Rise on UK CPI, Market Mood Firms Despite China Data

2016-01-19 06:51:00 Ilya Spivak, Head Strategist, APAC

Talking Points:

British Pound to Rise if Upbeat UK CPI Data Reboots BOE Rate Hike Bets
Aussie Dollar Gains as Market Mood Firms Despite Soft China GDP Print
Gauge Trends and Spot Reversals in Leading Currencies with DailyFX SSI

UK CPI data headlines the economic calendar in European trading hours. The core year-on-year inflation rate is expected to register at 1.2 percent in December, unchanged from the prior month. Leading survey data hints downward price pressures may have waned however, opening the door for an upside surprise. Such an outcome may breathe a big of life into rate hike speculation, offering a lift to the British Pound. Follow-on comments from BOE Governor Mark Carney represent a bit of wild card and may either amplify or undermine the initial post-CPI response, depending on the central bank chief’s tone.

A recovery in risk appetite shaped currency market dynamics in overnight trade. The sentiment-linked Australian Dollar rose alongside Asian shares while the Canadian Dollar tracked a recovery in crude oil prices. Anti-risk and funding currencies including the Euro, Yen and Swiss Franc underperformed. The chipper mood emerged despite a disappointing set of Chinese GDP figures that showed the year-on-year growth rate slowed to 6.8 percent, the weakest in seven years.

Getting the China GDP print out of the way may have been reason enough for a corrective recovery considering central role of news-flow from the East Asian giant as a driver of risk aversion since the start of the year. Some give-back seems reasonable given recent positioning swings. Using the S&P 500 futures as a baseline, last week’s COT data showed speculators in full-size contracts were the least net-long since March while traders of e-minis registered as the most net-short in two months. Pre-market cues hint the recovery in sentiment may continue as European and US bourses come online.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:30	AUD	Weekly Consumer Confidence Index (JAN 17)	113.2	-	114.1
02:00	CNY	Industrial Production YTD (YoY) (DEC)	6.1%	6.1%	6.1%
02:00	CNY	Industrial Production (YoY) (DEC)	5.9%	6.0%	6.2%
02:00	CNY	Retail Sales (YoY) (DEC)	11.1%	11.3%	11.2%
02:00	CNY	Retail Sales YTD (YoY) (DEC)	10.7%	10.7%	10.6%
02:00	CNY	Fixed Assets Ex Rural YTD (YoY) (DEC)	10.0%	10.2%	10.2%
02:00	CNY	GDP YTD (YoY) (4Q)	6.9%	6.9%	6.9%
02:00	CNY	GDP SA QoQ (4Q)	1.6%	1.8%	1.8%
02:00	CNY	GDP (YoY) (4Q)	6.8%	6.9%	6.9%
06:00	JPY	Machine Tool Orders (YoY) (DEC F)	-25.7%	-	-25.8%
06:30	JPY	Tokyo Condominium Sales (YoY) (DEC)	-34.1%	-	4.8%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:00	EUR	German CPI (MoM) (DEC F)	-0.1%	-0.1%	Medium
07:00	EUR	German CPI (YoY) (DEC F)	0.3%	0.3%	Medium
07:00	EUR	German CPI - EU Harmonized (MoM) (DEC F)	0.0%	0.0%	Low
07:00	EUR	German CPI - EU Harmonized (YoY) (DEC F)	0.2%	0.2%	Low
08:15	CHF	Producer & Import Prices (MoM) (DEC)	-0.2%	0.4%	Medium
08:15	CHF	Producer & Import Prices (YoY) (DEC)	-5.4%	-5.5%	Medium
09:00	EUR	ECB Current Account SA (NOV)	-	20.4b	Low
09:00	EUR	ECB Current Account NSA (NOV)	-	25.9b	Low
09:30	GBP	CPI (MoM) (DEC)	0.0%	0.0%	High
09:30	GBP	CPI (YoY) (DEC)	0.2%	0.1%	High
09:30	GBP	CPI Core (YoY) (DEC)	1.2%	1.2%	High
09:30	GBP	RPI (MoM) (DEC)	0.2%	0.1%	Low
09:30	GBP	RPI (YoY) (DEC)	1.1%	1.1%	Low
09:30	GBP	RPI Ex Mort Int. Payments (YoY) (DEC)	1.1%	1.1%	Low
09:30	GBP	PPI Input NSA (MoM) (DEC)	-1.7%	-1.6%	Low
09:30	GBP	PPI Input NSA (YoY) (DEC)	-11.7%	-13.1%	Low
09:30	GBP	PPI Output NSA (MoM) (DEC)	-0.2%	-0.2%	Medium
09:30	GBP	PPI Output NSA (YoY) (DEC)	-1.2%	-1.5%	Medium
09:30	GBP	PPI Output Core NSA (MoM) (DEC)	0.0%	-0.2%	Low
09:30	GBP	PPI Output Core NSA (YoY) (DEC)	-0.1%	-0.1%	Low
09:30	GBP	ONS House Price (YoY) (NOV)	-	7.0%	Medium
10:00	EUR	Eurozone Construction Output (MoM) (NOV)	-	0.5%	Low
10:00	EUR	Eurozone Construction Output (YoY) (NOV)	-	1.1%	Low
10:00	EUR	Eurozone CPI (MoM) (DEC)	0.0%	-0.1%	Medium
10:00	EUR	Eurozone CPI (YoY) (DEC F)	0.2%	0.2%	Medium
10:00	EUR	Eurozone CPI Core (YoY) (DEC F)	0.9%	0.9%	Medium
10:00	EUR	German ZEW Survey Current Situation (JAN)	53.1	55.0	Medium
10:00	EUR	German ZEW Survey Expectations (JAN)	8.0	16.1	Medium
10:00	EUR	Eurozone ZEW Survey Expectations (JAN)	-	33.9	Medium
12:00	GBP	BOE Governor Carney Speaks in London	-	-	Medium