Talking Points:
- Euro may fall as German ZEW survey highlights Brexit spillover
- NZ Dollar drops as RBNZ LVR expansion sets stage for rate cut
- July RBA minutes trigger easing speculation, sink Aussie Dollar
The German ZEW survey of investor confidence headlines the economic calendar in European trading hours. The forward-looking Expectations gauge is expected to issue the largest drop in eight months. News-flow out of the Euro zone’s largest economy has softened relative to consensus forecasts over the past month, opening the door for an even weaker outcome.
Markets will look to the release to help gauge projected spillover from last month’s UK Brexit referendum. Uncertainty about what the future EU-UK economic relationship will look like is likely have a cooling effect on activity on both sides of the English Channel. Furthermore, the vote’s outcome may embolden eurosceptic forces within the Eurozone.
The Euro seems to be under-pricing these risks. Data that shines a spotlight on them may shake investors out of their complacent state and put significant selling pressure on the single currency. Opportunities to develop this narrative and build follow-through abound this week as the ECB monetary policy announcement and July’s Eurozone flash PMI roundup cross the wires.
The Australian and New Zealand Dollars underperformed in overnight trade. The Kiwi plunged after the RBNZ unveiled an expansion of LVR restrictions aimed at deflating the buoyant housing market. Traders seemed to interpret this to mean that the central bank is setting the stage for a rate cut, a move it has been reluctant to make because lower borrowing costs might buoy real estate further.
The Aussie plunged after the release of minutes from July’s RBA policy meeting. In the document, officials said that the immediately upcoming inflation, housing and labor-market data will help to refine their assessment on the policy outlook. The markets appeared to find distinction between this and the RBA’s heretofore neutral posture, seeing it as foreshowing a rate cut.
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Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
---|---|---|---|---|---|
23:30 | AUD | ANZ Roy Morgan Weekly Consumer Conf | 114.9 | - | 115.2 |
01:18 | AUD | HIA House Affordability Index (2Q) | 78.7 | - | 81.7 |
01:30 | AUD | RBA July Meeting Minutes | - | - | - |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
---|---|---|---|---|---|
08:00 | EUR | ECB Bank Lending Survey | - | - | Medium |
08:30 | GBP | CPI (MoM) (JUN) | 0.2% | 0.2% | High |
08:30 | GBP | CPI (YoY) (JUN) | 0.4% | 0.3% | High |
08:30 | GBP | CPI Core (YoY) (JUN) | 1.3% | 1.2% | High |
08:30 | GBP | RPI (MoM) (JUN) | 0.2% | 0.3% | Medium |
08:30 | GBP | RPI (YoY) (JUN) | 1.5% | 1.4% | Medium |
08:30 | GBP | RPI Ex Mort Int. Payments (YoY) (JUN) | 1.5% | 1.5% | Low |
08:30 | GBP | PPI Input NSA (MoM) (JUN) | 1.1% | 2.6% | Low |
08:30 | GBP | PPI Input NSA (YoY) (JUN) | -0.8% | -3.9% | Low |
08:30 | GBP | PPI Output NSA (MoM) (JUN) | 0.2% | 0.1% | Medium |
08:30 | GBP | PPI Output NSA (YoY) (JUN) | -0.5% | -0.7% | Medium |
08:30 | GBP | PPI Output Core NSA (MoM) (JUN) | 0.1% | 0.0% | Low |
08:30 | GBP | PPI Output Core NSA (YoY) (JUN) | 0.6% | 0.5% | Low |
08:30 | GBP | House Price Index (YoY) (MAY) | - | 8.2% | Low |
09:00 | EUR | Eurozone Construction Output (MoM) (MAY) | - | -0.2% | Low |
09:00 | EUR | Eurozone Construction Output (YoY) (MAY) | - | -0.4% | Low |
09:00 | EUR | German ZEW Survey Current Situation (JUL) | 51.8 | 54.5 | High |
09:00 | EUR | German ZEW Survey Expectations (JUL) | 9 | 19.2 | High |
09:00 | EUR | Eurozone ZEW Survey Expectations (JUL) | - | 20.2 | High |
09:40 | GBP | BOE ILTR Operation Results | - | - | Medium |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
---|---|---|---|---|---|---|---|
EURUSD | 1.0974 | 1.1020 | 1.1047 | 1.1066 | 1.1093 | 1.1112 | 1.1158 |
GBPUSD | 1.2919 | 1.3080 | 1.3168 | 1.3241 | 1.3329 | 1.3402 | 1.3563 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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