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Euro Looks to 3Q GDP Data to Revive Recovery

Euro Looks to 3Q GDP Data to Revive Recovery

Talking Points:

  • Euro recovery may resume on 3Q GDP data after overnight retracement
  • US Dollar follow-through may be limited on upbeat PCE inflation figure
  • Japanese Yen pressured as stocks rise in Asia, curbing anti-risk demand

The Euro underperformed in overnight trade in a move that appeared corrective following Friday’s outsized advance. The Japanese Yen traded lower as stocks firmed in Asian trade, undermining demand for the perennial anti-risk currency.

Eurozone CPI and GDP figures headline the economic calendar in European trading hours. News-flow out of the regional bloc has increasingly outperformed relative to consensus forecasts in recent weeks. This suggests analysts’ models are underestimating the economy’s vigor and opens the door for upbeat surprises.

A pickup on the inflation front may pass with little fanfare considering its limited implications for near-term ECB monetary policy. A better-than-expected growth reading may speak to resilience in spite of the would-be cooling effects of uncertainty linked to the Brexit referendum, which may boost demand for EUR-denominated assets and echo positively for the single currency.

The spotlight then moves to September’s US PCE data. The Fed’s favored inflation gauge is seen putting core growth at 1.7 percent year-on-year, matching a two-year high. An upbeat print may boost rate hike bets and the US Dollar, though follow-through could be limited ahead of this week’s FOMC announcement.

Where are the major currencies heading in the fourth quarter? See our forecast and find out!

Asia Session

21:45NZDBuilding Permits (MoM) (SEP)0.2%--1.5%
23:50JPYIndustrial Production (MoM) (SEP P)0.0%0.9%1.3%
23:50JPYIndustrial Production (YoY) (SEP P)0.9%1.9%4.5%
23:50JPYRetail Trade (YoY) (SEP)-1.9%-1.8%-2.2%
23:50JPYRetail Sales (MoM) (SEP)0.0%0.2%-1.2%
23:50JPYDept. Store, Supermarket Sales (SEP)-3.2%-2.7%-3.6%
0:00AUDMelbourne Institute Inflation (MoM) (OCT)0.2%-0.4%
0:00AUDMelbourne Institute Inflation (YoY) (OCT)1.5%-1.3%
0:00NZDANZ Activity Outlook (OCT)38.4-42.4
0:00NZDANZ Business Confidence (OCT)24.5-27.9
0:01GBPLloyds Business Barometer (OCT)37-24
0:30AUDPrivate Sector Credit (MoM) (SEP)0.4%0.4%0.4%
0:30AUDPrivate Sector Credit (YoY) (SEP)5.4%5.5%5.8%
2:00NZDMoney Supply M3 (YoY) (SEP)4.8%-5.3%
4:00JPYVehicle Production (YoY) (SEP)1.4%-8.8%
5:00JPYHousing Starts (YoY) (SEP)10.0%5.20%2.5%
5:00JPYAnnualized Housing Starts (SEP)0.984m0.949m0.956m
5:00JPYConstruction Orders (YoY) (SEP)16.3%-13.8%

European Session

7:00EURGerman Retail Sales (MoM) (SEP)-1.4% (A)-0.3%Medium
7:00EURGerman Retail Sales (YoY) (SEP)0.4% (A)3.8%Medium
9:00CHFTotal Sight Deposits 518.5b (A)518.5bLow
9:00CHFDomestic Sight Deposits 451.9b (A)451.3bLow
9:30GBPNet Consumer Credit (SEP)1.4b (A)1.6bLow
9:30GBPNet Lending Sec. on Dwellings (SEP)3.2b (A)3.1bLow
9:30GBPMortgage Approvals (SEP)62.9k (A)61.0kMedium
9:30GBPM4 Money Supply (MoM) (SEP)-0.4%1.0%Low
9:30GBPM4 Money Supply (YoY) (SEP)6.2%5.4%Low
9:30GBPM4 Ex IOFCs 3M Annualised (SEP)10.0%11.2%Low
10:00EUREurozone CPI Estimate (YoY) (OCT)0.5%0.4%High
10:00EUREurozone CPI Core (YoY) (OCT A)0.8%0.8%High
10:00EUREurozone GDP SA (QoQ) (3Q A)0.3%0.3%High
10:00EUREurozone GDP SA (YoY) (3Q A)1.6%1.6%High

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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