Euro, US Dollar Outlook Hinges on Inflation Data

2016-02-26 06:57:00

Talking Points:

Euro may find interim support if Germany’s flash CPI data tops forecasts
US Dollar may fail to capitalize as core PCE inflation hits 15-month high
NZ Dollar gains with milk prices as dairy exports rise most since Aug’14

The preliminary set of February’s German CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to slow to 0.1 percent, the lowest since September. However, leading survey data from Markit Economics released earlier this week suggested the pace of inflation – while modest – quickened to a three-month high. The Euro may find a degree of support if this translates into a better-than-expected CPI print that weighs against ECB stimulus expansion bets.

Price growth trends will remain in focus later in the day as the Fed’s preferred US PCE inflation data comes across the wires. The core year-on-year rate is seen edging higher to 1.5 percent, the highest since October 2014. While broadly encouraging for the US Dollar, the improvement was telegraphed in last week’s CPI report and so may have lost some of its market-moving potential. Follow-through could be undermined further if investors weigh up the report against PMI survey data published earlier in the week that showed service-sector inflation hit a five-month low while manufacturing output prices fell at the fastest pace since June 2012.

The New Zealand Dollar outperformed overnight after January’s Trade Balance report revealed an unexpected monthly surplus of NZ$8 million, topping bets on a –NZ$271 million deficit. This marked the first print in positive territory since May 2015. Perhaps most critically, cross-border sales of dairy products – the country’s leading export group – jumped 3.7 percent year-on-year to record the best performance since August 2014. Indeed, the Kiwi traded higher alongside locally-traded Whole Milk futures prices.

What did DailyFX analysts get wrong last year? Check out our Lessons from 2015 to find out!

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:45	NZD	Trade Balance (JAN)	8M	-271M	-38M
21:45	NZD	Exports (JAN)	3.90B	3.71B	4.43B
21:45	NZD	Imports (JAN)	3.89B	3.95B	4.46B
21:45	NZD	Trade Balance 12-mo YTD (JAN)	-3578M	-3871M	-3534M
23:30	JPY	Natl CPI (YoY) (JAN)	0.0%	0.0%	0.2%
23:30	JPY	Natl CPI Ex Fresh Food (YoY) (JAN)	0.0%	0.0%	0.1%
23:30	JPY	Natl CPI Ex Food, Energy (YoY) (JAN)	0.7%	0.7%	0.8%
23:30	JPY	Tokyo CPI (YoY) (FEB)	0.1%	-0.3%	-0.3%
23:30	JPY	Tokyo CPI Ex-Fresh Food (YoY) (FEB)	-0.1%	-0.2%	-0.1%
23:30	JPY	Tokyo CPI Ex Food, Energy (YoY) (FEB)	0.5%	0.4%	0.4%
00:05	GBP	GfK Consumer Confidence (FEB)		3	4
00:45	CNH	PBOC Governor Zhou Speaks in Shanghai	-	-	-
01:00	CNH	Swift Global Payments CNY (JAN)	2.45%	-	2.31%
01:30	CNH	China January Property Prices	-	-	-
01:30	CNH	PBOC Governor Zhou Gives Briefing	-	-	-
05:00	JPY	Nat’l CPI Ex Fresh Food, Energy (YoY) (JAN)	1.1%	1.2%	1.3%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:45	EUR	French GDP (QoQ) (4Q P)	0.2%	0.2%	Medium
07:45	EUR	French GDP (YoY) (4Q P)	1.3%	1.3%	Medium
10:00	EUR	Eurozone Economic Confidence (FEB)	104.3	105.0	Low
10:00	EUR	Eurozone Business Climate Indicator (FEB)	0.27	0.29	Low
10:00	EUR	Eurozone Industrial Confidence (FEB)	-3.6	-3.2	Low
10:00	EUR	Eurozone Services Confidence (FEB)	11.4	11.6	Low
10:00	EUR	Eurozone Consumer Confidence (FEB F)	-	-8.8	Medium
13:00	EUR	German CPI (MoM) (FEB P)	0.5%	-0.8%	High
13:00	EUR	German CPI (YoY) (FEB P)	0.1%	0.5%	High
13:00	EUR	German CPI - EU Harmonized (MoM) (FEB P)	0.6%	-1.0%	High
13:00	EUR	German CPI - EU Harmonized (YoY) (FEB P)	0.0%	0.4%	High