Euro May Fall After CPI Data as Pound Gains on GDP Revision
- Euro may fall as CPI data’s passing clears path for retracement
- Pound may rise if revised Q1 GDP data flatters BOE policy pivot
- Yen, commodity FX gain vs. US Dollar as Treasury yields decline
The June set of flash Eurozone CPI figures headlines the economic data docket in European trading hours. The headline year-on-year inflation rate is expected to tick down to 1.2 percent, the lowest in almost four years. Analogous figures out of Germany surprised firmly to the upside yesterday but the Euro curiously declined thereafter.
This raises the possibility the passing of today’s release will be more significant than its content. As long as the result does not dramatically deviate from forecasts, it may amount to a signpost for the start of profit-taking ahead of the weekend. The single currency’s impressive gains in recent days suggest that such corrective flows may bring it a touch lower.
A revised set of UK GDP figures is also on tap. Flash estimates showing output added 0.2 percent in the first quarter are expected to be confirmed. A surprise upgrade echoing the cautious improvement in recent UK news-flow would chime well with hawkish overtones in recent BOE rhetoric. This may amount to a supportive backdrop for the British Pound.
The US Dollar tracked broadly lower in Asian trade as Treasury bond yields ticked downward, pointing to ebbing rates-based support for the benchmark currencies. Yield-sensitive currencies at both ends of the G10 FX spectrum – the Australian, Canadian and New Zealand Dollars at the upper extreme and the Japanese Yen at the lower one – duly outperformed.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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