Talking Points:
Euro May Move Closer to 1.37 vs. USD if June’s Flash CPI Estimate Tops Forecasts
US Dollar Has Scope to Rebound on Upbeat Home Sales Figures, Fed Commentary
NZ Dollar Fell in Asia as a Drop in Business Confidence Hurt RBNZ Rate Hike Bets
The preliminary set of June’s Eurozone CPI figures headlines the economic calendar in European hours. Expectations call for the benchmark year-on-year inflation rate to print at 0.5 percent, unchanged from the prior month. Leading data from Markit Economics pointed to a pickup in regional price growth over the relevant period, with both manufacturing and service-sector companies citing higher oil prices as the culprit. If this proves to foreshadow an upside surprise on today’s release, the Euro may move higher as traders reduce bets on a near-term expansion of ECB stimulus efforts. Technical positioning underscores the possibility of further EUR/USD gains ahead.
Later in the day, the spotlight turns to US news-flow. May’s Pending Home Sales report is on tap, with consensus forecasts pointing to a 1.2 percent month-on-month increase after a meager 0.4 percent gain in April. Last week’s existing and new home sales figures broadly outperformed expectations, hinting more of the same may be in the cards. Separately, the Fed’s John Williams is set to speak. The President of the central bank’s San Francisco branch is seen as a close confidant of current Fed Chair Janet Yellen, whom he replaced when she was elevated to the Board of Governors. Mr Williams struck a moderately hawkish tone in his comments last week, suggesting a similar approach can be expected this time around. Taken together, this may translate into a bounce for the US Dollar.
The New Zealand Dollar underperformed in overnight trade, sliding as much as 0.45 percent on average against its leading counterparts. The move followed a disappointing outcome on June’s ANZ Business Confidence measure, which showed sentiment tumbled to the lowest level in 13 months. The Kiwi’s slide tracked a drop in benchmark 10-year New Zealand bond yield, hinting soft economic news-flow was weighing against RBNZ rate hike expectations.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
22:45
NZD
Building Permits (MoM) (MAY)
-4.6%
-2.5%
1.9%
23:50
JPY
Industrial Production (YoY) (JUN P)
0.8%
1.5%
3.8%
23:50
JPY
Industrial Production (MoM) (JUN P)
0.5%
0.9%
-2.8%
1:00
AUD
HIA New Home Sales (MoM) (MAY)
-4.3%
–
2.9%
1:00
NZD
ANZ Activity Outlook (JUN)
45.8
–
51.0
1:00
NZD
NBNZ Business Confidence (JUN)
42.8
–
53.5
1:30
AUD
Private Sector Credit (MoM) (MAY)
0.4%
0.4%
0.5%
1:30
AUD
Private Sector Credit (YoY) (MAY)
4.7%
4.7%
4.6%
3:00
NZD
Money Supply M3 (YoY) (MAY)
5.2%
–
5.3%
4:00
JPY
Vehicle Production (YoY) (MAY)
6.1%
–
3.4%
5:00
JPY
Small Business Confidence (JUN)
47.3
–
46.6
5:00
JPY
Annualized Housing Starts (MAY)
0.872M
0.909M
0.906M
6:00
JPY
Construction Orders (YoY) (MAY)
13.7%
–
104.9%
6:00
JPY
Housing Starts (YoY) (MAY)
-15.0%
-10.5%
-3.3%
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
6:00
EUR
German Retail Sales (MoM) (MAY)
0.8%
-0.9%
Medium
6:00
EUR
German Retail Sales (YoY) (MAY)
1.0%
3.2%
Medium
8:00
EUR
Euro-Zone M3 s.a. (3M/3M) (MAY)
0.8%
1.0%
Low
8:00
EUR
Euro-Zone M3 s.a. (YoY) (MAY)
0.8%
0.8%
Low
8:30
GBP
Net Consumer Credit (MAY)
0.7B
0.7B
Low
8:30
GBP
Net Lending Sec. on Dwellings (MAY)
1.6B
1.7B
Low
8:30
GBP
Mortgage Approvals (MAY)
61.8K
62.9K
Medium
8:30
GBP
M4 Money Supply (MoM) (MAY)
-0.1%
-0.2%
Low
8:30
GBP
M4 Money Supply (YoY) (MAY)
-0.3%
-0.6%
Low
8:30
GBP
M4 Ex IOFCs 3M Annualised (MAY)
3.1%
4.5%
Low
9:00
EUR
Euro-Zone CPI – Core (YoY) (JUN A)
0.7%
0.7%
High
9:00
EUR
Euro-Zone CPI Estimate (YoY) (JUN)
0.5%
0.5%
High
9:00
EUR
Italian CPI (NIC incl. tobacco) (MoM) (JUN P)
0.1%
-0.1%
Low
9:00
EUR
Italian CPI (NIC incl. tobacco) (YoY) (JUN P)
0.3%
0.5%
Low
9:00
EUR
Italian CPI – EU Harmonized (YoY) (JUN P)
0.4%
0.4%
Low
9:00
EUR
Italian CPI – EU Harmonized (MoM) (JUN P)
0.2%
-0.1%
Low
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.3555
1.3596
1.3622
1.3637
1.3663
1.3678
1.3719
GBPUSD
1.6941
1.6986
1.7011
1.7031
1.7056
1.7076
1.7121
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx
