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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, 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.

Losing Money Trading Forex? This Might Be Why.

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

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0755

1.0828

1.0860

1.0901

1.0933

1.0974

1.1047

GBP/USD

1.4096

1.4182

1.4212

1.4268

1.4298

1.4354

1.4440

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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