Euro to Look Past German Data, US Dollar May Rise on Q1 GDP
- Euro to look past German CPI, jobs data on limited ECB policy view impact
- US Dollar focused on 1Q GDP report to shape Fed rate hike timing outlook
- Yen and NZ Dollar rise as BOJ, RBNZ disappoint the markets’ dovish hopes
The preliminary set of April’s German CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to decline to 0.1 percent from 0.3 percent in the prior month. Separately, labor-market figures are expected see no change in the ranks of the unemployment, with the jobless rate steady at 6.2 percent.
On balance, both outcomes are unlikely to see a lasting response from the Euro considering their limited implications for near-term ECB monetary policy. Speaking after last week’s rate decision, central bank President Mario Draghi argued that officials will need more time to assess the impact of a large stimulus expansion unveiled in March before considering further easing. With the first TLRO II operation is due in June, meaning the ECB is likely to remain in wait-and-see mode for a while yet.
Later in the day, first-quarter US GDP figures will capture the spotlight. The annualized growth rate is expected to decline to 0.6 percent, the weakest in a year. The release may prove pivotal to Fed rate hike bets after the central bank conspicuously removed the reference to global risks in yesterday’s policy statement (as we expected), refocusing attention on domestic news-flow.
As it stands, traders’ priced-in outlook envisions a single rate hike in the fourth quarter of 2016. A strong GDP print that clashes with status-quo expectations and hints the Fed’s latest call for two hikes this year may be validated stands to broadly boost the US Dollar. A soft reading stands to yield the opposite result, although an upside surprise is likely to be more market-moving that the alternative considering investors’ already-dovish posture.
The Japanese Yen outperformed in overnight trade, adding nearly 2 percent against its major counterparts after the Bank of Japan opted against a further easing of monetary policy. Traders had been speculating on further stimulus after rumors about the introduction of a negative lending rate emerged last week. The New Zealand Dollar likewise advanced after the RBNZ poured cold water on imminent rate cut speculation.
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|21:00||NZD||RBNZ Official Cash Rate (APR 28)||2.25%||2.25%||2.25%|
|23:30||JPY||Jobless Rate (MAR)||3.2%||3.3%||3.3%|
|23:30||JPY||Job-To-Applicant Ratio (MAR)||1.30||1.28||1.28|
|23:30||JPY||Overall Household Spending (YoY) (MAR)||-5.3%||-4.1%||1.2%|
|23:30||JPY||Natl CPI (YoY) (MAR)||-0.1%||0.0%||0.3%|
|23:30||JPY||Natl CPI Ex Fresh Food (YoY) (MAR)||-0.3%||-0.2%||0.0%|
|23:30||JPY||Natl CPI Ex Food, Energy (YoY) (MAR)||0.7%||0.8%||0.8%|
|23:30||JPY||Tokyo CPI (YoY) (APR)||-0.4%||-0.2%||-0.1%|
|23:30||JPY||Tokyo CPI Ex-Fresh Food (YoY) (APR)||-0.3%||-0.3%||-0.3%|
|23:30||JPY||Tokyo CPI Ex Food, Energy (YoY) (APR)||0.6%||0.5%||0.6%|
|23:50||JPY||Retail Trade (YoY) (MAR)||-1.1%||-1.4%||0.5%|
|23:50||JPY||Retail Sales (MoM) (MAR)||1.4%||0.5%||-2.3%|
|23:50||JPY||Dept. Store, Supermarket Sales (MAR)||-1.2%||-0.9%||2.2%|
|23:50||JPY||Industrial Production (MoM) (MAR P)||3.6%||2.8%||-5.2%|
|23:50||JPY||Industrial Production (YoY) (MAR P)||0.1%||-1.6%||-1.2%|
|01:00||CNY||Swift Global Payments CNY (MAR)||1.88%||-||1.76%|
|01:30||AUD||Export price index (QoQ) (1Q)||-4.7%||-1.5%||-5.4%|
|01:30||AUD||Import price index (QoQ) (1Q)||-3.0%||-0.9%||-0.3%|
|03:01||JPY||BOJ Annual Rise in Monetary Base (¥)||80t||80t||80t|
|03:01||JPY||BOJ Basic Balance Rate||0.10%||0.10%||0.10%|
|03:01||JPY||BOJ Macro Add-On Balance Rate||0.00%||0.00%||0.00%|
|03:01||JPY||BOJ Policy Rate||-0.10%||-0.10%||-0.10%|
|04:00||JPY||Vehicle Production (YoY) (MAR)||1.2%||-||-6.9%|
|05:00||JPY||Natl CPI Ex Fresh Food, Energy (YoY) (MAR)||1.1%||1.0%||1.1%|
|05:00||JPY||Housing Starts (YoY) (MAR)||8.4%||-0.6%||7.8%|
|05:00||JPY||Annualized Housing Starts (MAR)||0.993m||0.905m||0.974m|
|05:00||JPY||Construction Orders (YoY) (MAR)||19.8%||-||-12.4%|
|05:25||CHF||SNB Earnings (1Q)||-||-||Low|
|06:00||GBP||Nationwide House Price (MoM) (APR)||0.4%||0.8%||Medium|
|06:00||GBP||Nationwide House Price (YoY) (APR)||5.0%||5.7%||Medium|
|07:55||EUR||German Unemployment Change (000's) (APR)||0k||0k||Medium|
|07:55||EUR||German Unemployment Claims Rate SA (APR)||6.2%||6.2%||Medium|
|09:00||EUR||Eurozone Economic Confidence (APR)||103.4||103.0||Low|
|09:00||EUR||Eurozone Business Climate Indicator (APR)||0.14||0.11||Low|
|09:00||EUR||Eurozone Industrial Confidence (APR)||-4.0||-4.2||Low|
|09:00||EUR||Eurozone Services Confidence (APR)||10.0||9.6||Low|
|09:00||EUR||Eurozone Consumer Confidence (APR F)||-9.3||-9.3||Medium|
|12:00||EUR||German CPI (MoM) (APR P)||-0.2%||0.8%||High|
|12:00||EUR||German CPI (YoY) (APR P)||0.1%||0.3%||High|
|CCY||Supp 3||Supp 2||Supp 1||Pivot Point||Res 1||Res 2||Res 3|
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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