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Euro Looks to 3Q GDP Data to Revive Recovery

Euro Looks to 3Q GDP Data to Revive Recovery

Ilya Spivak, Head Strategist, APAC

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

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Building Permits (MoM) (SEP)

0.2%

-

-1.5%

23:50

JPY

Industrial Production (MoM) (SEP P)

0.0%

0.9%

1.3%

23:50

JPY

Industrial Production (YoY) (SEP P)

0.9%

1.9%

4.5%

23:50

JPY

Retail Trade (YoY) (SEP)

-1.9%

-1.8%

-2.2%

23:50

JPY

Retail Sales (MoM) (SEP)

0.0%

0.2%

-1.2%

23:50

JPY

Dept. Store, Supermarket Sales (SEP)

-3.2%

-2.7%

-3.6%

0:00

AUD

Melbourne Institute Inflation (MoM) (OCT)

0.2%

-

0.4%

0:00

AUD

Melbourne Institute Inflation (YoY) (OCT)

1.5%

-

1.3%

0:00

NZD

ANZ Activity Outlook (OCT)

38.4

-

42.4

0:00

NZD

ANZ Business Confidence (OCT)

24.5

-

27.9

0:01

GBP

Lloyds Business Barometer (OCT)

37

-

24

0:30

AUD

Private Sector Credit (MoM) (SEP)

0.4%

0.4%

0.4%

0:30

AUD

Private Sector Credit (YoY) (SEP)

5.4%

5.5%

5.8%

2:00

NZD

Money Supply M3 (YoY) (SEP)

4.8%

-

5.3%

4:00

JPY

Vehicle Production (YoY) (SEP)

1.4%

-

8.8%

5:00

JPY

Housing Starts (YoY) (SEP)

10.0%

5.20%

2.5%

5:00

JPY

Annualized Housing Starts (SEP)

0.984m

0.949m

0.956m

5:00

JPY

Construction Orders (YoY) (SEP)

16.3%

-

13.8%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

EUR

German Retail Sales (MoM) (SEP)

-1.4% (A)

-0.3%

Medium

7:00

EUR

German Retail Sales (YoY) (SEP)

0.4% (A)

3.8%

Medium

9:00

CHF

Total Sight Deposits

518.5b (A)

518.5b

Low

9:00

CHF

Domestic Sight Deposits

451.9b (A)

451.3b

Low

9:30

GBP

Net Consumer Credit (SEP)

1.4b (A)

1.6b

Low

9:30

GBP

Net Lending Sec. on Dwellings (SEP)

3.2b (A)

3.1b

Low

9:30

GBP

Mortgage Approvals (SEP)

62.9k (A)

61.0k

Medium

9:30

GBP

M4 Money Supply (MoM) (SEP)

-0.4%

1.0%

Low

9:30

GBP

M4 Money Supply (YoY) (SEP)

6.2%

5.4%

Low

9:30

GBP

M4 Ex IOFCs 3M Annualised (SEP)

10.0%

11.2%

Low

10:00

EUR

Eurozone CPI Estimate (YoY) (OCT)

0.5%

0.4%

High

10:00

EUR

Eurozone CPI Core (YoY) (OCT A)

0.8%

0.8%

High

10:00

EUR

Eurozone GDP SA (QoQ) (3Q A)

0.3%

0.3%

High

10:00

EUR

Eurozone GDP SA (YoY) (3Q A)

1.6%

1.6%

High

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0759

1.0858

1.0921

1.0957

1.1020

1.1056

1.1155

GBP/USD

1.1974

1.2072

1.2129

1.2170

1.2227

1.2268

1.2366

--- 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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