Euro Looks to 3Q GDP Data to Revive Recovery

2016-10-31 09:45:00

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