Talking Points:
Euro to Fall if Soft German CPI Print Drives ECB Stimulus Expectations
Thin Holiday Liquidity May Amplify Impact of Unexpected Headline Risk
Aussie, New Zealand Dollars Rise as Risk Appetite Firms on Asian Bourses
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The preliminary estimate of November’s German CPI figures headlines the economic calendar in European hours. The headline year-on-year inflation rate is expected to print at 1.2 percent, matching the six-month low recorded in the prior month.
A downside surprise on October’s report foreshadowed a drop below 1 percent on the Eurozone region-wide CPI print for the same period and paved the way for a surprise ECB interest rate cut. News-flow from the currency bloc has increasingly underperformed relative to expectations in the past three months, opening the door for a similar outcome this time around. That would feed speculation about further accommodation, driving the Euro lower. We continue to hold short EUR/USD.
Also of note, liquidity is likely to turn scarce as US financial markets shut down for the Thanksgiving holiday. While thin trading conditions can make for muted price, they can likewise amplify volatility in the event that unforeseen headline risk or a particularly sharp deviation from economic data expectations spooks investors.
The Australian and New Zealand Dollars outperformed overnight trade as Asian stocks advancing, pulling the sentiment-linked currencies upward along the way. The MSCI Asia Pacific regional benchmark equity index rose 0.7 percent in a move the newswires chalked up to swelling confidence in the US recovery after an upbeat set of Jobless Claims and UofM Consumer Confidence figures.
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Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
23:50
JPY
Retail Trade (YoY) (OCT)
2.3%
2.1%
3.0%
23:50
JPY
Retail Trade s.a. (MoM) (OCT)
-1.0%
-0.8%
1.7%
23:50
JPY
Large Retailers’ Sales (OCT)
-0.4%
-0.1%
0.7%
0:00
NZD
ANZ Activity Outlook (NOV)
47.1
–
47.1
0:00
NZD
ANZ Business Confidence (NOV)
60.5
–
53.2
0:00
AUD
HIA New Home Sales (MoM) (OCT)
-3.8%
–
6.4%
0:30
AUD
Private Capital Expenditure (3Q)
3.6%
-1.2%
1.6%
1:30
CNY
Industrial Profits YTD (YoY) (OCT)
13.7%
–
13.5%
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
6:45
CHF
GDP (YoY) (3Q)
1.8%
2.5%
Medium
6:45
CHF
GDP (QoQ) (3Q)
0.4%
0.5%
Medium
7:00
EUR
German Import Price Index (MoM) (OCT)
-0.3%
0.0%
Low
7:00
EUR
German Import Price Index (YoY) (OCT)
-2.6%
-2.8%
Low
8:55
EUR
German Unemployment Rate s.a. (NOV)
6.9%
6.9%
High
8:55
EUR
German Unemployment Change (NOV)
0K
2K
High
9:00
EUR
Euro-Zone M3 s.a. (YoY) (OCT)
1.7%
2.1%
Low
9:00
EUR
Euro-Zone M3 s.a. (3M Avg) (OCT)
2.0%
2.2%
Low
9:30
GBP
Lloyds Business Barometer (NOV)
–
63
Low
10:00
EUR
Euro-Zone Economic Confidence (NOV)
98.0
97.8
Low
10:00
EUR
Euro-Zone Industrial Confidence (NOV)
-4.4
-4.8
Low
10:00
EUR
Euro-Zone Consumer Confidence (NOV F)
-15.4
-15.4
Medium
10:00
EUR
Euro-Zone Services Confidence (NOV)
-3.5
-3.7
Low
10:00
EUR
Euro-Zone Business Climate Indicator (NOV)
0.05
-0.01
Low
13:00
EUR
German CPI (MoM) (NOV P)
0.1%
-0.2%
High
13:00
EUR
German CPI (YoY) (NOV P)
1.2%
1.2%
High
13:00
EUR
German CPI – EU Harmonised (MoM) (NOV P)
-0.1%
-0.3%
Medium
13:00
EUR
German CPI – EU Harmonised (YoY) (NOV P)
1.3%
1.2%
Medium
Critical Levels:
CCY
SUPP 3
SUPP 2
SUPP 1
Pivot Point
RES 1
RES 2
RES 3
EURUSD
1.3473
1.3528
1.3554
1.3583
1.3609
1.3638
1.3693
GBPUSD
1.6006
1.6139
1.6213
1.6272
1.6346
1.6405
1.6538
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx