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Euro May Fall Further as Soft CPI Hints More ECB Easing Ahead

Euro May Fall Further as Soft CPI Hints More ECB Easing Ahead

Talking Points:

  • NZ Dollar falls as data drives rate cut bets, Yen gains as S&P 500 futures fall
  • Euro downturn may continue as soft inflation data beckons more ECB easing
  • Global stimulus expansion hopes may offer support to risk sentiment trends

The New Zealand Dollar underperformed to start the trading week after a string of disappointing data releases fueled RBNZ rate cut speculation. A measure of business confidence from ANZ Bank fell by the most since October. A separate report showed Building Permits fell 8.2 percent, making for the biggest drawdown since September 2014. The Kiwi fell alongside New Zealand bond yields, suggesting the soft results spurred easing bets. Meanwhile, the Yen is trading higher as S&P 500 futures open lower, hinting at a risk-off mood inspiring liquidation of carry trades funded in terms of the perennially low-yielding Japanese unit.

Looking ahead, the preliminary set of February’s Eurozone CPI figures is in focus. The core year-on-year inflation rate is expected to decline to 0.9 percent from the 1.0 percent recorded in January. Last week’s analogous report from Germany – the currency bloc’s largest economy – proved disappointing relative to consensus forecasts. A similar result on the region-wide metric may boost bets on ECB stimulus expansion at next month’s policy meeting, weighing on the Euro.The prospect of an increase in global accommodation my help risk appetite however,offering support to sentiment-linked FX including the Australian Dollar.

What are DailyFX analysts' top trade ideas for 2016? Find out here !

Asia Session

GMTCCYEVENTACTEXPPREV
21:30NZDANZ Activity Outlook (FEB)25.5-34.4
21:30NZDANZ Business Confidence (FEB)7.1-23.0
21:45NZDBuilding Permits (MoM) (JAN)-8.2%-2.3%
23:50JPYIndustrial Production (MoM) (JAN P) 3.7%3.2%-1.7%
23:50JPYIndustrial Production (YoY) (JAN P) -3.8%-3.8%-1.9%
23:50JPYRetail Trade (YoY) (JAN)-0.1%0.1%-1.1%
23:50JPYRetail Sales (MoM) (JAN)-1.1%0.1%-0.3%
23:50JPYDept. Store, Supermarket Sales (JAN)1.0%-0.2%0.0%
00:00AUDMelbourne Institute Inflation (MoM) (FEB)-0.2%-0.4%
00:00AUDMelbourne Institute Inflation (YoY) (FEB)2.1%-2.3%
00:01GBPLloyds Business Barometer (FEB)28-45
00:30AUDInventories SA (QoQ) (4Q)-0.4%0.1%0.0%
00:30AUDCompany Operating Profit (QoQ) (4Q)-2.8%-1.8%1.4%
00:30AUDPrivate Sector Credit (MoM) (JAN)0.5%0.5%0.5%
00:30AUDPrivate Sector Credit (YoY) (JAN)6.5%6.5%6.6%
02:00NZDMoney Supply M3 (YoY) (JAN)7.6%-8.1%
04:00JPYVehicle Production (YoY) (JAN)-5.8%--2.3%
05:00JPYHousing Starts (YoY) (JAN)0.2%-0.3%-1.3%
05:00JPYAnnualized Housing Starts (JAN)0.873M0.870M0.860M
05:00JPYConstruction Orders (YoY) (JAN)-13.8%-14.8%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00EURGerman Import Price Index (MoM) (JAN)-1.0%-1.2%Low
07:00EURGerman Import Price Index (YoY) (JAN)-3.4%-3.1%Low
07:00EURGerman Retail Sales (MoM) (JAN)0.3%0.6%Low
07:00EURGerman Retail Sales (YoY) (JAN)1.8%1.5%Low
08:00CHFKOF Leading Indicator (FEB)99.3100.3Low
08:00CHFTotal Sight Deposits (FEB 26)-476.2BLow
08:00CHFDomestic Sight Deposits (FEB 26)-411.6BLow
09:30GBPNet Consumer Credit (JAN)1.4B1.2BMedium
09:30GBPNet Lending Sec. on Dwellings (JAN)3.7B3.2BLow
09:30GBPMortgage Approvals (JAN)74.0K70.8KMedium
09:30GBPM4 Money Supply (MoM) (JAN)--0.2%Low
09:30GBPM4 Money Supply (YoY) (JAN)-0.2%Low
09:30GBPM4 Ex. IOFCs 3M Annualised (JAN)-4.0%Low
10:00EUREurozone CPI Estimate (YoY) (FEB)0.0%0.3%High
10:00EUREurozone CPI Core (YoY) (FEB A) 0.9%1.0%High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EUR/USD1.06591.08151.08751.09711.10311.11271.1283
GBP/USD1.35451.37341.38021.39231.39911.41121.4301

--- 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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