Talking Points:

Euro to be More Sensitive to Positive vs. Negative Eurozone CPI Outcome
Aussie, NZ Dollars Rise Alongside S&P 500 Futures as Risk Aversion Fades
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The preliminary set of September’s Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, matching the five-year low recorded in the prior month.

While leading survey suggested that both selling prices and input costs weakened further in September, it ought to be noted that realized inflation-tracking data outcomes have notably improved relative to consensus forecasts since the beginning of the year (according to data from Citigroup). Though readings have tended to fall short of expectations, the margin of disappointment has steadily narrowed since January.

This suggests that the markets may be nearing a point where forecasters are sufficiently acclimated to the extent of Eurozone disinflation. In such an environment, the ability of soft price-growth figures to underperform and thereby inspire Euro selling pressure is diminished. The aggressive build in speculative net-short EUR exposure and the already realized arrival of a significant ECB stimulus effort compounds this.

On balance, this means that the single currency may prove relatively unresponsive to an in-line or even somewhat softer CPI print. On the contrary, a better-than-expected read could trigger liquidation of Euro shorts, fueling a swift corrective bounce.

The Australian and New Zealand Dollars outperformed in overnight trade, rising as much as 0.3 and 0.7 percent respectively against their leading counterparts. The move tracked an overnight advance in S&P 500 index futures, hinting a recovery in risk appetite following the shakeout at the start of the trading week was the catalyst behind price action.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

21:45

NZD

Building Permits (MoM) (AUG)

0.0%

-1.7%

23:05

GBP

GfK Consumer Confidence Survey (SEP)

-1

23:30

AUD

ANZ Roy Morgan Weekly Consumer Conf

113.7

–

112.9

23:30

JPY

Jobless Rate (AUG)

3.5%

3.8%

23:30

JPY

Job-to-Applicant Ratio (AUG)

1.1