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

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

Ilya Spivak,

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.

Losing Money Trading Forex? This Might Be Why.

Asia Session

22:30AUDWeekly Consumer Confidence Index (JAN 17)113.2-114.1
02:00CNYIndustrial Production YTD (YoY) (DEC)6.1%6.1%6.1%
02:00CNYIndustrial Production (YoY) (DEC)5.9%6.0%6.2%
02:00CNYRetail Sales (YoY) (DEC)11.1%11.3%11.2%
02:00CNYRetail Sales YTD (YoY) (DEC)10.7%10.7%10.6%
02:00CNYFixed Assets Ex Rural YTD (YoY) (DEC)10.0%10.2%10.2%
02:00CNYGDP YTD (YoY) (4Q)6.9%6.9%6.9%
02:00CNYGDP SA QoQ (4Q)1.6%1.8%1.8%
02:00CNYGDP (YoY) (4Q)6.8%6.9%6.9%
06:00JPYMachine Tool Orders (YoY) (DEC F)-25.7%--25.8%
06:30JPYTokyo Condominium Sales (YoY) (DEC)-34.1%-4.8%

European Session

07:00EURGerman CPI (MoM) (DEC F)-0.1%-0.1%Medium
07:00EURGerman CPI (YoY) (DEC F)0.3%0.3%Medium
07:00EURGerman CPI - EU Harmonized (MoM) (DEC F)0.0%0.0%Low
07:00EURGerman CPI - EU Harmonized (YoY) (DEC F)0.2%0.2%Low
08:15CHFProducer & Import Prices (MoM) (DEC)-0.2%0.4%Medium
08:15CHFProducer & Import Prices (YoY) (DEC)-5.4%-5.5%Medium
09:00EURECB Current Account SA (NOV)-20.4bLow
09:00EURECB Current Account NSA (NOV)-25.9bLow
09:30GBPCPI (MoM) (DEC)0.0%0.0%High
09:30GBPCPI (YoY) (DEC)0.2%0.1%High
09:30GBPCPI Core (YoY) (DEC)1.2%1.2%High
09:30GBPRPI (MoM) (DEC)0.2%0.1%Low
09:30GBPRPI (YoY) (DEC)1.1%1.1%Low
09:30GBPRPI Ex Mort Int. Payments (YoY) (DEC)1.1%1.1%Low
09:30GBPPPI Input NSA (MoM) (DEC)-1.7%-1.6%Low
09:30GBPPPI Input NSA (YoY) (DEC)-11.7%-13.1%Low
09:30GBPPPI Output NSA (MoM) (DEC)-0.2%-0.2%Medium
09:30GBPPPI Output NSA (YoY) (DEC)-1.2%-1.5%Medium
09:30GBPPPI Output Core NSA (MoM) (DEC)0.0%-0.2%Low
09:30GBPPPI Output Core NSA (YoY) (DEC)-0.1%-0.1%Low
09:30GBPONS House Price (YoY) (NOV)-7.0%Medium
10:00EUREurozone Construction Output (MoM) (NOV)-0.5%Low
10:00EUREurozone Construction Output (YoY) (NOV)-1.1%Low
10:00EUREurozone CPI (MoM) (DEC)0.0%-0.1%Medium
10:00EUREurozone CPI (YoY) (DEC F)0.2%0.2%Medium
10:00EUREurozone CPI Core (YoY) (DEC F)0.9%0.9%Medium
10:00EURGerman ZEW Survey Current Situation (JAN)53.155.0Medium
10:00EURGerman ZEW Survey Expectations (JAN)8.016.1Medium
10:00EUREurozone ZEW Survey Expectations (JAN)-33.9Medium
12:00GBPBOE Governor Carney Speaks in London--Medium

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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