Talking Points:
Euro May Fall if Timid ABS Purchase Effort Fuels “Sovereign QE” Outlook
NZ Dollar Falls Before RBNZ Rate Decision, Aussie Down on Chinese Data
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The European Central Bank will be in the spotlight in European trading hours as it announces the size of last week’s covered bond and ABS purchases. The central bank has purchased €17.8 billion in covered bonds since the effort began in late October at a pace of about €2.7 billion per week, an effort that has been unable to significantly ramp up balance sheet expansion.
Today’s announcement will mark the first round of reporting on ABS purchases and traders are likely to look to the outcome as a pace-setter. Repayments of past LTRO efforts have averaged about €6 billion per week since October, explaining why covered bond-buying has been unable to deliver a potent stimulative push. If ABS uptake is too small to make a meaningful difference in this calculus, firming bets on a future move to “sovereign QE” may weigh on the Euro.
The New Zealand Dollar underperformed in overnight trade, falling as much as 0.8 percent on average against its leading counterparts. The selloff tracked a drop in the 3-month bank bill yield, pointing to fading rate hike expectations ahead of this week’s RBNZ policy announcement as the likely catalyst behind the selloff.
The Australian Dollar likewise fell following a disappointing set of Chinese trade figures that showed exports grew just 4.7 percent year-on-year in November. The reading fell short of expectations calling for a 8 percent gain and marked the smallest increase in seven months. The Aussie lost as much as 0.4 percent against the majors.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
21:45
NZD
Mfg Activity Volume (QoQ) (3Q)
0.4%
–
-0.6%
21:45
NZD
Mfg Activity (QoQ) (3Q)
-1.2%
–
-2.3%
23:50
JPY
Current Account Total (¥) (OCT)
833.4B
370.1B
963.0B
23:50
JPY
Adjusted Current Account Total (¥) (OCT)
947.0B
455.0B
414.4B
23:50
JPY
Trade Balance – BOP Basis (¥) (OCT)
-766.6B
-569.6B
-714.5B
23:50
JPY
GDP (QoQ) (3Q F)
-0.5%
-0.1%
-0.4%
23:50
JPY
GDP Annualized (3Q F)
-1.9%
-0.5%
-1.6%
23:50
JPY
Nominal GDP (QoQ) (3Q F)
-0.9%
-0.5%
-0.8%
23:50
JPY
GDP Deflator (YoY) (3Q F)
2.1%
–
2.1%
23:50
JPY
GDP Business Spending (QoQ) (3Q F)
-0.4%
0.9%
-0.2%
23:50
JPY
GDP Private Consumption (QoQ) (3Q F)
0.4%
0.4%
0.4%
23:50
JPY
Bank Lending incl. Trusts (YoY) (NOV)
2.7%
–
2.3%
23:50
JPY
Bank Lending Banks ex. Trusts (NOV)
2.8%
2.4%
2.4%
0:30
AUD
ANZ Job Advertisements (MoM) (NOV)
0.7%
–
0.2%
2:07
CNY
Trade Balance ($) (NOV)
54.47B
43.95B
45.41B
2:07
CNY
Exports (YoY) (NOV)
4.7%
8.0%
11.6%
2:07
CNY
Imports (YoY) (NOV)
-6.7%
3.8%
4.6%
4:30
JPY
Bankruptcies (YoY) (NOV)
-14.61%
–
-16.57%
5:00
JPY
Eco Watchers Survey: Outlook (NOV)
44.0
47.0
46.6
5:00
JPY
Eco Watchers Survey: Current (NOV)
41.5
45.8
44.0
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:00
EUR
German Industrial Production (MoM) (OCT)
0.4%
1.4%
Medium
7:00
EUR
German Industrial Production (YoY) (OCT)
0.9%
-0.1%
Medium
8:15
CHF
Consumer Price Index (MoM) (NOV)
-0.1%
0.0%
Medium
8:15
CHF
Consumer Price Index (YoY) (NOV)
-0.1%
0.0%
Medium
8:15
CHF
CPI – EU Harmonized (MoM) (NOV)
–
0.0%
Low
8:15
CHF
CPI – EU Harmonized (YoY) (NOV)
–
0.1%
Low
8:15
CHF
Retail Sales (Real) (YoY) (OCT)
–
0.3%
Low
9:30
GBP
Lloyds Employment Confidence (NOV)
–
0
Low
9:30
EUR
Eurozone Sentix Investor Confidence (DEC)
-9.0
-11.9
Low
14:45
EUR
ECB Covered Bond, ABS Purchases
–
–
High
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.2072
1.2194
1.2239
1.2316
1.2361
1.2438
1.2560
GBPUSD
1.5363
1.5489
1.5534
1.5615
1.5660
1.5741
1.5867
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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