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Breaking news

NFP prints at 339k vs estimates of 190k, ave earnings in line at 0.3% MoM

Euro to Look Past German Data, US Dollar May Rise on Q1 GDP

Euro to Look Past German Data, US Dollar May Rise on Q1 GDP

Ilya Spivak,

Talking Points:

  • 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.

Are FXCM traders buying or selling the US Dollar, and what does that mean? Find out here !

Asia Session

21:00NZDRBNZ Official Cash Rate (APR 28)2.25%2.25%2.25%
23:30JPYJobless Rate (MAR)3.2%3.3%3.3%
23:30JPYJob-To-Applicant Ratio (MAR)1.301.281.28
23:30JPYOverall Household Spending (YoY) (MAR)-5.3%-4.1%1.2%
23:30JPYNatl CPI (YoY) (MAR)-0.1%0.0%0.3%
23:30JPYNatl CPI Ex Fresh Food (YoY) (MAR)-0.3%-0.2%0.0%
23:30JPYNatl CPI Ex Food, Energy (YoY) (MAR)0.7%0.8%0.8%
23:30JPYTokyo CPI (YoY) (APR)-0.4%-0.2%-0.1%
23:30JPYTokyo CPI Ex-Fresh Food (YoY) (APR)-0.3%-0.3%-0.3%
23:30JPYTokyo CPI Ex Food, Energy (YoY) (APR)0.6%0.5%0.6%
23:50JPYRetail Trade (YoY) (MAR)-1.1%-1.4%0.5%
23:50JPYRetail Sales (MoM) (MAR)1.4%0.5%-2.3%
23:50JPYDept. Store, Supermarket Sales (MAR)-1.2%-0.9%2.2%
23:50JPYIndustrial Production (MoM) (MAR P)3.6%2.8%-5.2%
23:50JPYIndustrial Production (YoY) (MAR P)0.1%-1.6%-1.2%
01:00CNYSwift Global Payments CNY (MAR)1.88%-1.76%
01:30AUDExport price index (QoQ) (1Q)-4.7%-1.5%-5.4%
01:30AUDImport price index (QoQ) (1Q)-3.0%-0.9%-0.3%
03:01JPYBOJ Annual Rise in Monetary Base (¥)80t80t80t
03:01JPYBOJ Basic Balance Rate 0.10%0.10%0.10%
03:01JPYBOJ Macro Add-On Balance Rate0.00%0.00%0.00%
03:01JPYBOJ Policy Rate-0.10%-0.10%-0.10%
04:00JPYVehicle Production (YoY) (MAR)1.2%--6.9%
05:00JPYNatl CPI Ex Fresh Food, Energy (YoY) (MAR)1.1%1.0%1.1%
05:00JPYHousing Starts (YoY) (MAR)8.4%-0.6%7.8%
05:00JPYAnnualized Housing Starts (MAR)0.993m0.905m0.974m
05:00JPYConstruction Orders (YoY) (MAR)19.8%--12.4%

European Session

05:25CHFSNB Earnings (1Q)--Low
06:00GBPNationwide House Price (MoM) (APR)0.4%0.8%Medium
06:00GBPNationwide House Price (YoY) (APR)5.0%5.7%Medium
07:55EURGerman Unemployment Change (000's) (APR)0k0kMedium
07:55EURGerman Unemployment Claims Rate SA (APR)6.2%6.2%Medium
09:00EUREurozone Economic Confidence (APR)103.4103.0Low
09:00EUREurozone Business Climate Indicator (APR)0.140.11Low
09:00EUREurozone Industrial Confidence (APR)-4.0-4.2Low
09:00EUREurozone Services Confidence (APR)10.09.6Low
09:00EUREurozone Consumer Confidence (APR F)-9.3-9.3Medium
12:00EURGerman CPI (MoM) (APR P)-0.2%0.8%High
12:00EURGerman CPI (YoY) (APR P)0.1%0.3%High

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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